Stanton v. Bank of America, N.A. et al

Filing 94

ORDER GRANTING IN PART AND DENYING IN PART BANK OF AMERICA, N.A.'S 66 MOTION FOR SUMMARY JUDGMENT AND DENYING FIDELITY ESCROW NATIONAL TITLE & ESCROW OF HAWAII, INC.'S 69 RENEWED MOTION FOR SUMMARY JUDGMENT ON COUNTS 8, 12, & 14 OF PLAI NTIFFS FIRST AMENDED COMPLAINT. Signed by District JUDGE LESLIE E. KOBAYASHI on November 30, 2011. (bbb, )CERTIFICATE OF SERVICEParticipants registered to receive electronic notifications received this document electronically at the e-mail address listed on the Notice of Electronic Filing (NEF). Participants not registered to receive electronic notifications were served by first class mail on the date of this docket entry

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
CAROLYN ROSEMARY ESPINA
STANTON,

)
)
)
)
Plaintiff,
)
vs.
)
)
BANK OF AMERICA, N.A.,
)
)
SUCCESSOR BY MERGER TO
COUNTRYWIDE BANK, N.A., ET
)
)
AL.,
)
)
Defendant.
_____________________________ )

CIVIL NO. 09-00404 LEK-BMK

ORDER GRANTING IN PART AND DENYING IN PART
BANK OF AMERICA, N.A.’S MOTION FOR SUMMARY JUDGMENT AND
DENYING FIDELITY ESCROW NATIONAL TITLE & ESCROW
OF HAWAII, INC.’S RENEWED MOTION FOR SUMMARY JUDGMENT
ON COUNTS 8, 12, & 14 OF PLAINTIFF’S FIRST AMENDED COMPLAINT
On June 15, 2011, Defendant Bank of America, N.A.,
successor by merger to Countrywide Bank, N.A. (“BOA”), filed its
Motion for Summary Judgment (“BOA Motion”) and its concise
statement of facts in support of the BOA Motion (“BOA CSOF”).
Also on June 15, 2011, Defendant Fidelity National Title & Escrow
of Hawaii, Inc. (“Fidelity Escrow”) filed its Renewed Motion for
Summary Judgment on Counts 8, 12, & 14 of Plaintiff’s First
Amended Complaint (“Fidelity Escrow Motion”) and its concise
statement of facts in support thereof (“Fidelity Escrow CSOF”).
On September 14, 2011, Plaintiff Carolyn Rosemary Espina Stanton
(“Plaintiff”) filed her: memorandum in opposition to the BOA

Motion; concise statement of facts in opposition to the BOA
Motion (“Plaintiff’s BOA CSOF”); memorandum in opposition to the
Fidelity Escrow Motion; and concise statement of facts in
opposition to the Fidelity Escrow Motion (“Plaintiff’s Fidelity
Escrow CSOF”).

On September 14, 2011, Fidelity Escrow filed a

statement of no position as to the BOA Motion.

BOA filed its

reply memorandum (“BOA Reply”) on September 21, 2011, and
Fidelity Escrow filed its reply memorandum (“Fidelity Escrow
Reply”) on September 20, 2011.
These matters came on for hearing on October 5, 2011.
Patricia McHenry, Esq., appeared on behalf of BOA.

Jade Ching,

Esq., and J. Blaine Rogers, Esq., appeared on behalf of Fidelity
Escrow.

Colin Yost, Esq., and George Zweibel, Esq., appeared on

behalf of Plaintiff.

After careful consideration of the motions,

supporting and opposing memoranda, and the arguments of counsel,
the BOA Motion is HEREBY GRANTED IN PART AND DENIED IN PART, and
the Fidelity Escrow Motion is HEREBY DENIED for the reasons set
forth below.
BACKGROUND
Plaintiff filed this action on August 27, 2009.
Defendant Loan Network LLC (“Loan Network”) failed to respond to
the Complaint, and Plaintiff obtained an entry of default on
October 1, 2009.

On April 12, 2010, pursuant to a stipulation by

the parties, [dkt. no. 25,] Plaintiff filed her First Amended

2

Complaint [dkt. no. 26].
Some of the basic facts of this case are set forth in a
dispositive order filed before the case was reassigned to this
Court.
I.

The Transaction

Plaintiff alleges that she purchased the
property located at 5404 Poola Street, Honolulu,
Hawai`i 96821 (the “Property”) in 2003. (“[First
Amended] Compl.” ¶ 18, Doc. # 26.) In late 2006,
Plaintiff states that she discussed refinancing
the Property with the mortgage broker for the
transaction, Defendant Loan Network LLC (“Loan
Network”) in order to “obtain cash for house
upgrades and improvements.” (Id. ¶¶ 18-19.) The
lender for the transaction was Defendant Bank of
America, N.A., successor by merger to Countrywide
Bank, N.A. (“Countrywide”). (Id. ¶¶ 8, 24-25.)
Pursuant to written instructions from the parties,
and specifically the instructions between
Plaintiff and Defendant Fidelity National Title &
Escrow of Hawaii, Inc. (“Fidelity Escrow” or
“Defendant”), Fidelity Escrow served as the escrow
depository for the refinancing loan transaction.
(Id. ¶ 29; Doc. # 32, Declaration of Dot Yoza,
“Yoza Decl.” ¶ 3 & Ex. D.) The escrow
instructions signed and accepted by Plaintiff (the
“Escrow Instructions”) provide, inter alia, that:
[Fidelity Escrow] serves ONLY as an Escrow
Holder in connection with these instructions
and cannot give legal advice to any party
hereto.
Escrow Holder is not to be accountable or
liable for the sufficiency or correctness as
to form, manner of execution, or validity of
any instrument deposited in this escrow, nor
as to the identity, authority or rights of
any person executing the same. Escrow
Holder’s duties hereunder shall be limited to
the proper handling of such money and the
proper safekeeping of such instruments, or
other documents received by Escrow Holder,
3

and for the disposition of same in accordance
with the written instructions accepted by
Escrow Holder.
(Yoza Decl., Ex. D ¶ 19.)
As alleged by Plaintiff, the principal amount
of the first loan was $1,500,000.00. ([First
Amended] Compl. ¶ 37.) The first loan is
evidenced by a mortgage dated February 1, 2007 and
recorded February 12, 2007, in the Office of the
Assistant Registrar of the Land Court of the State
of Hawai`i (“Land Court”) as Document No. 3558893
(the “First Mortgage”). (Id.; Doc. # 32,
Declaration of Moritz “Moritz Decl.,” Ex. B.) The
principal amount of the second loan was
$215,000.00, and the second loan is evidenced by a
mortgage dated February 1, 2007 and recorded
February 12, 2007, in the Land Court as Document
No. 3558894 (the “Second Mortgage”) (collectively,
the First Mortgage and Second are hereinafter the
“Loan”). ([First Amended] Compl. ¶ 49; Moritz
Decl., Ex. C.) Plaintiff states that she signed
the relevant Loan documents at Fidelity Escrow’s
offices and did not read them. ([First Amended]
Compl. ¶¶ 31, 32, 34, 46.) Plaintiff refinanced
her Property with the two loans and obtained over
$330,000 in cash. (Id., Exs. E, F.)
Stanton v. Bank of Am., N.A., Cv. No. 09-00404 DAE-LEK, 2010 WL
4176375, at *1 (D. Hawai`i Oct. 19, 2010).1
Plaintiff alleges that, before she signed the Loan
Documents, Loan Network made various representations to her about
what the terms of the loans would be.
•Although Plaintiff did not qualify for the single, fixed-rate
loan that she wanted, she would still qualify for “excellent

1

This citation refers to the Amended Order Granting in Part
With and Without Prejudice and Denying in Part Defendant Fidelity
National Title & Escrow of Hawaii’s Motion for Summary Judgment.
The Court will refer to this order as the “10/19/10 Summary
Judgment Order”.
4

rates” and would have a combined mortgage payment of “well
under $8,500” per month. [First Amended Complaint at ¶¶ 2022; Pltf.’s BOA CSOF, Decl. of Carolyn Rosemary Espina
Stanton (“Stanton BOA Decl.”) at ¶ 9.]
•The loans would have no more than a one-year prepayment penalty.
[Stanton BOA Decl. at ¶ 10.]
•According to two Good Faith Estimates dated January 2, 2007 that
Loan Network provided from Countrywide (“1/2/07 Good Faith
Estimates”): the first loan, for $1,505,000, would be a
thirty-year loan at 6.500% per annum, with a monthly
principal and interest payment of $4,840.67; and the second
loan, for $215,000, would be a fifteen-year loan at 6.000%
per annum, with a monthly principal and interest payment of
$1,289.03.2 [Id. at ¶¶ 11, 13.]
Plaintiff states that she relied upon these representations in
deciding to obtain the two loans, and she did not receive any
communications about changes to the terms of the loans between
her receipt of the 1/2/07 Good Faith Estimates and the closing.
[Id. at ¶¶ 15, 17.]

She states that, on the closing date, she

was not given copies to keep of any of the documents that she
signed.

[Id. at ¶¶ 22-23.]

Plaintiff did not discover the true

terms of the loans until sometime after she received her copies
of the documents on or about February 12 or 13, 2007.
26-27.]

[Id. at ¶¶

The true loan terms include:

•The interest on the first loan was initially 8.500% per annum
and “was to be adjusted each month equal to the applicable
12-month U.S. Treasury Securities rate (the ‘index’) plus
3.575% (the ‘margin’), up to a maximum of 9.950%.” [First
Amended Complaint at ¶ 37; Stanton BOA Decl. at ¶ 28.]
•The monthly payments for the first year would be $5,358.65 based
on a rate of 1.750%, and would be adjusted each year
thereafter. A payment cap, however, limited the amount that

2

Unsigned copies of the 1/2/07 Good Faith Estimates are
attached to Plaintiff’s BOA CSOF as Exhibits 1 and 2 to the
Stanton BOA Declaration.
5

the resulting monthly payments could exceed the prior year’s
payments. This would result in negative amortization up to
115% of the original principal amount, at which time the
monthly payments could change more frequently and would not
be subject to the cap. [First Amended Complaint at ¶¶ 3839; Stanton BOA Decl. at ¶ 29.]
•Countrywide estimated that the monthly payments would increase
to $13,612.59 in less than three-and-a-half years. [Pltf.’s
BOA CSOF, Decl. of Colin A. Yost (“Yost BOA Decl.”), Exh. 7
(Truth in Lending Disclosure Statement, dated February 1,
2007, stating that the first loan had 319 payments of
$13,612.59 and a final payment of $13,608.96).]
•The first loan had a three-year prepayment penalty. [Yost BOA
Decl., Exh. 8 (Prepayment Penalty Addendum for first loan).]
•The second loan was a home equity line of credit of up to
$215,000 that Plaintiff could draw from for five years, with
a possible five-year extension. The rate was initially
10.625% per annum, but was “to be adjusted each month to
equal the applicable highest prime rate published in The
Wall Street Journal (the ‘index’) plus 2.375% (the
‘margin’), up to a maximum of 18.000% per annum.” [First
Amended Complaint at ¶ 49; Stanton BOA Decl. at ¶ 28.]
•At the 10.625% rate, the monthly, interest-only payments during
the draw period would be $1,903.65. [First Amended
Complaint at ¶ 52.]
•After the draw period, there was “a 15-year repayment period,
during which minimum payments equal to 1/180th of the
outstanding principal balance plus accrued finance charges
would be required.” [Id. at ¶ 51.]
Plaintiff states that, if she “had been provided with the loan
documents and/or an estimated settlement statement on February 1,
2007, [she] would have cancelled the transaction on or before
February 5, 2007.”

[Stanton BOA Decl. at ¶ 35.]

Plaintiff also

states that “[o]ver a period of many months,” she and others
acting on her behalf, including a California attorney, attempted
to communicate with Countrywide about the “changed terms” of the
loans, but Countrywide would not talk to them.

[Id. at ¶ 39.]

The First Amended Complaint acknowledges that, on

6

February 1, 2007, Plaintiff was instructed to sign a “Notice of
Right to Cancel” in connection with both loans.
Complaint at ¶¶ 44, 54.]

[First Amended

She also alleges that, as to the first

loan, she was instructed to sign two different “Truth in Lending
Disclosure Statements” and each had “a different ‘annual
percentage rate,’ ‘finance charge,’ ‘amount financed,’ ‘total of
payments,’ payment schedule, and other credit terms.”
45.]

[Id. at ¶

Plaintiff states that, on or after February 12, 2007, she

received a Notice of Right to Cancel for each loan “stating that
the date of the transaction was February 1, 2007 and that [she]
had until midnight on February 5, 2007 to cancel each loan.”3
[Stanton BOA Decl. at ¶ 36, Exh. 4 (Notice of Right to Cancel for
the first loan), Exh. 5 (Notice of Right to Cancel for the second
loan).]
Plaintiff alleges that she exercised her right to
rescind both loans, but BOA did not allow rescission.
Amended Complaint at ¶¶ 88, 94, 103, 109.]

[First

The instant action

followed.
The First Amended Complaint alleges the following
claims: a Truth in Lending Act (“TILA”) claim seeking rescission
of the first loan and recoupment (Count I); a TILA damages claim
against BOA based on the first loan (Count II); a TILA claim

3

The Court will refer to the documents collectively as the
“2/5/07 Cancellation Notices”.
7

seeking rescission of the second loan and recoupment (Count III);
a TILA damages claim against BOA based on the second loan (Count
IV); a claim for violations of the Credit Repair Organizations
Act against Loan Network (Count V); an unfair or deceptive acts
or practices (“UDAP”) claim against BOA, alleging violations of
Haw. Rev. Stat. §§ 480-2(a) and/or 481A-3 (Count VI); a UDAP
claim against Loan Network (Count VII); a UDAP claim against
Fidelity Escrow (Count VIII); a fraud claim against BOA (Count
IX); a fraud claim against Loan Network (Count X); a civil
conspiracy claim alleging that Countrywide, Loan Network, and
Fidelity Escrow conspired to defraud Plaintiff (Count XI); an
aiding and abetting claim against Countrywide, Loan Network, and
Fidelity Escrow (Count XII); a negligence claim against Fidelity
Escrow (Count XIII); and a breach of fiduciary duty claim against
Fidelity Escrow pursuant to Haw. Rev. Stat. § 449-16 (Count XIV).
The First Amended Complaint seeks: injunctive and
ancillary relief during the pendency of this action; rescission
and recoupment of both loans; a declaratory judgment that any
contract or agreement for the two loans is void and
unenforceable; actual, compensatory, and statutory damages;
punitive damages; reasonable attorneys’ fees and costs; and any
other appropriate relief.
Fidelity Escrow filed a motion for summary judgment
(“Fidelity Escrow 2010 Motion”) on May 5, 2010.

8

[Dkt. no. 31.]

On July 30, 2010, United States District Judge David Alan Ezra
issued his Order Granting in Part With and Without Prejudice and
Denying in Part Defendant Fidelity National Title & Escrow of
Hawaii’s Motion for Summary Judgment.

[Dkt. no. 42.]

Fidelity

Escrow filed a motion for reconsideration on August 13, 2010, and
BOA filed a joinder on August 20, 2010.

[Dkt. nos. 46, 48.]

On

October 18, 2010, Judge Ezra issued an amended order denying the
motion for reconsideration,4 2010 WL 4115403, but the order also
stated that he would issue an amended summary judgment order
addressing the issues raised on reconsideration.

The 10/19/10

Summary Judgment Order followed.
In the 10/19/10 Summary Judgment Order, Judge Ezra:
granted summary judgment to Fidelity Escrow as to Count XIII,
negligence; granted summary judgment without prejudice to
Fidelity Escrow as to Count XI, civil conspiracy;5 denied
Fidelity Escrow summary judgment as to Count XII, aiding and
abetting; denied Fidelity Escrow summary judgment on Count VIII,

4

Judge Ezra issued the original order denying Fidelity
Escrow’s motion for reconsideration on September 30, 2010. [Dkt.
no. 52.]
5

Plaintiff stated in her opposition to the Fidelity Escrow
2010 Motion that she intended to conduct more discovery. The
10/19/10 Summary Judgment Order gave Plaintiff leave to file a
motion to amend her complaint to re-allege the civil conspiracy
claim against Fidelity Escrow if the additional discovery
revealed evidence supporting the claim. Stanton, 2010 WL
4176375, at *19. Plaintiff, however, never sought leave to file
a second amended complaint.
9

UDAP, as to the portion of the claim based on failure to timely
provide the Loan Documents;6 granted summary judgment to Fidelity
Escrow as to all other allegations in Count VIII; denied Fidelity
Escrow summary judgment on Count XIV, breach of fiduciary duty,
as to the portion of the claim based on failure to timely provide
the Loan Documents; and granted summary judgment to Fidelity
Escrow as to all other allegations in Count XIV.

Stanton, 2010

WL 4176375, at *19.
I.

BOA’s Motion
In the BOA Motion, BOA first asserts that, contrary to

Plaintiff’s claims, Loan Network prepared Good Faith Estimates
for two loans for Plaintiff in December 2006.

The first was for

a $1,505,000 loan with a thirty-year term and an adjustable
interest rate, starting at 7.5%.

[BOA CSOF, Declaration of

Ana Alvarado (“Alvarado Decl.”), Exh. C.]

The second was a

$215,000 interest-only loan, with a thirty-year term at a fixed
rate of 9.5%.

[Id., Exh. D.]

After reviewing Plaintiff’s loan

application, however, Countrywide issued a counter offer of 8.5%
and 10.625% for the two loans, [Mem. in Supp. of BOA Motion at
2,] which Plaintiff accepted [Alvarado Decl., Exh. E (email dated
1/8/07 from Robin Lefcourt regarding “stanton acceptance”)].

6

The 10/19/10 Summary Judgment Order does not contain a
definition of the term “Loan Documents”. Fidelity argues that it
was Judge Ezra’s intent that the term refer to all documents
associated with the First Mortgage and the Second Mortgage.
[Mem. in Supp. of Fidelity Escrow’s Motion at 1 n.2.]
10

Loan Network issued new Good Faith Estimates with the new
interest rates on January 31, 2007, and Plaintiff signed them on
February 1, 2007.

[Id., Exhs. F, G.]

BOA emphasizes that the

1/2/007 Good Faith Estimates with the rates Plaintiff allegedly
relied upon are not signed.

[Mem. in Supp. of BOA Motion at 3

n.1.]
BOA does not contest Plaintiff’s description of the
terms of loans she ultimately entered into.

[Id. at 3; Alvarado

Decl., Exh. H (Monthly Adjustable Rate PayOption Note), Exh. I
(Home Equity Credit Line Agr. & Disclosure Stat.), Exh. J
(Amortization Schedule for first loan), Exh. K (document BOA
describes as the TILA disclosure for the first loan), Exh. L
(Important Terms of Our Home Equity Line of Credit).]
BOA emphasizes that the 2/5/07 Cancellation Notices,
which Plaintiff signed, stated, inter alia:
You have a legal right under federal law to cancel
this transaction, without cost, within THREE
BUSINESS DAYS from whichever of the following
events occurs last:
(1)
(2)
(3)

The date of the transaction, which is
; or
2/1/2007
The date you received your Truth in
Lending disclosures; or
the date you received this notice of
your right to cancel.

. . . .
If you cancel by mail or telegram, you must
send the notice no later than MIDNIGHT of
2/5/2007
(or MIDNIGHT of the THIRD
BUSINESS DAY following the latest of the three
11

events listed above.)
[Alvarado Decl., Exhs. M, N (emphases in original).]

BOA also

emphasizes that Plaintiff acknowledges that the closing
instructions Countrywide provided to Fidelity Escrow provided
that Fidelity Escrow was to give Plaintiff a copy of the Loan
Documents at closing.

[Mem. in Supp. of BOA Motion at 4; Pltf.’s

CSOF in Opp. to Fidelity Escrow 2010 Motion, at ¶ 12, Decl. of
Colin A. Yost, Exh. 7 (closing instructions).]
BOA argues that Counts I through IV, the TILA claims,
fail because TILA and Regulation Z expressly contemplate that
lenders may deliver notices of the right to cancel and other
material disclosures after the consummation of the loan.

BOA

urges the Court to apply Palmer v. Champion Mortgage, which held
that “a properly completed notice of right to cancel, even if
received after the date of the transaction, ‘complie[s] with the
applicable TILA requirements.’”

[Mem. in Supp. of BOA Motion at

6-7 (citing 465 F.3d 24, 31 (1st Cir. 2006)).]

BOA acknowledges

that the 10/19/10 Summary Judgment Order recognized that the
Ninth Circuit has not squarely considered the issue whether a
notice like the ones Plaintiff received would be considered a
technical TILA violation.

BOA distinguishes Semar v. Platte

Calley Federal Savings & Loan Ass’n, 791 F.2d 699 (9th Cir.
1986), which held that the failure to fill in the blank for the
expiration date on a rescission form was a violation of TILA.

12

In

the present case, the date was filed in, making the case more
like Palmer than Semar.

[Id. at 9-10.]

BOA also emphasizes that 15 U.S.C. § 1635(h), enacted
in 1995, prohibits rescission claims based on the form of the
notice of right to cancel where the lender used the appropriate
form, such as the form published by the Board of Governors of the
Federal Reserve System (“the Board”).

BOA argues that, in light

of such amendments to TILA, “‘Congress has now leaned against a
penalty approach and, perhaps, weakened the present force of the
older case law,’ including Semar.”

[Mem. in Supp. of BOA Motion

at 10 (quoting Melfi v. WMC Mortg. Corp., 568 F.3d 309, 313 (1st
Cir. 2009)).]

BOA argues that several other courts have rejected

borrowers’ claims of TILA violations based on the date they
received a properly completed notice of right to cancel.

[Id. at

11-12 (citing Ware v. Indymac Bank, FSB, 534 F. Supp. 2d 835
(N.D. Ill. 2008); Colanzi v. Savings First Mortgage, LLC, No. 073632, 2008 WL 161170 (E.D. Pa. Jan 16, 2008); Mourer v.
Equicredit Corp., 309 B.R. 502 (Bankr. W.D. Mich. 2004); Chabot
v. Wash. Mut. Bank, 369 B.R. 1, 15 (Bankr. D. Mont. 2007)).]
BOA next argues that Count VI (UDAP) and Count IX
(fraud) fail because Plaintiff cannot support her factual
allegations, and she cannot show causation or damages.

BOA

categorizes Plaintiff’s UDAP allegations as relating to either
Countrywide’s alleged attempts to deprive Plaintiff of her right

13

to cancel, or alleged misrepresentations in early Good Faith
Estimates regarding terms and costs of the loans.

[Id. at 15.]

BOA argues that there is no evidence to support the first
category of allegations because Countrywide’s closing
instructions expressly required the closing agent to provide
Plaintiff with the Loan Documents, including the notices of right
to cancel.

[Id. at 15-16.]

As to the second category, BOA

argues that Plaintiff cannot establish that Countrywide’s acts
caused her to enter into loans with unanticipated terms, because
the terms were disclosed to her before she executed the loans.
Plaintiff could have reviewed the documents before she signed
them, but she chose not to do so.

[Id. at 16-17.]

Further, the

alleged UDAPs cannot form the basis of a fraud claim because the
alleged representations about the more favorable terms were
“‘mere prognostication or prophecy as to happening of future
events and did not concern an existing material fact and it was
utterly unreasonable for [Plaintiff] to rely upon such
representations.’”

[Id. at 19 (quoting Stahl v. Balsara, 587

P.2d 1210, 1214 (Haw. 1978)).]
Finally, BOA argues that Count XII (aiding and
abetting) and Count XI (conspiracy) fail because Plaintiff cannot
produce evidence that Countrywide knew of, substantially assisted
with, or agreed to participate in, any of the other defendants’
tortious acts.

BOA also argues that Plaintiff cannot prove an

14

independent breach of duty by Countrywide.

[Id. at 20-23.]

Plaintiff cannot show that Countrywide and Loan Network united to
accomplish a fraudulent scheme.

The correspondence between those

two entities occurred in the normal course of business and does
not show any illegal objective.

[Id. at 23 (citing 10/19/10

Summary Judgment Order at 50-51).]
A.

Plaintiff’s Opposition
In addition to the factual allegations discussed supra,

Plaintiff emphasizes the following:
In late 2006, she first approached Loan Network
mortgage broker Sean Ramos about refinancing her home mortgage.
After inquiring with various lenders, including Countrywide, he
informed her that he would not be able to broker a deal for her
because she did not meet lender requirements.

A short time

later, Plaintiff met Robin Lefcourt, who stated that she had
recently left a position at Countrywide’s Honolulu office to join
Loan Network.

Ms. Lefcourt represented that she could use her

connections at Countrywide to obtain a deal for Plaintiff.
Plaintiff provided Ms. Lefcourt the same financial information
she gave Mr. Ramos.

[Mem. in Opp. to BOA Motion at 3-4 (citing

Stanton Decl. at ¶¶ 3-7).]
During the loan closing held at Fidelity Escrow’s
office, a Fidelity Escrow employee, Dot Yoza, only gave Plaintiff
the signature pages of the Loan Documents to sign.

15

Plaintiff did

not have time to review the documents, nor did she receive any
explanation about the documents.

Plaintiff was not suspicious of

this process because she had no reason to believe that the terms
of the loans would be significantly different than what she had
been promised by Countrywide and Loan Network.

[Id. at 5 (citing

Stanton Decl. at ¶¶ 18-21).]
As to the TILA claims, Plaintiff acknowledges that the
notice of right to cancel can be delivered after loan
consummation, but Plaintiff emphasizes that the rescission period
does not begin to run until the notice is given, and she asserts
that a notice which does not comply with § 226.15(b) or §
226.23(b) cannot trigger the rescission period.

[Id. at 14-15.]

Plaintiff argues that TILA required Countrywide to deliver a
corrected notice with the proper expiration date.

[Id. at 15

(citing Semar v. Platte Valley Fed. S & L Assoc., 791 F.2d 699,
704 (9th Cir. 1986); Jackson v. Grant, 890 F.2d 118 (9th Cir.
1989); Williams v. Rickard, 2010 U.S. Dist. LEXIS 65391 (D. Haw.
June 30, 2010); Nichols v. Deutsche Bank Nat‘l Trust Co., 2007
U.S. Dist. LEXIS 86223 (S.D. Cal. Nov. 21, 2007); Smith v. Wells
Fargo Credit Corp., 713 F. Supp. 354 (D. Ariz. 1989)).]
Plaintiff urges the Court to reject Palmer and Melfi because they
contradict Ninth Circuit law and present an anomalous standard.
[Id. at 16.]

Further, other circuits have adopted strict

standards similar to Semar, a case that the Ninth Circuit has

16

never disturbed.

[Id. at 18 (citing Hamm v. Ameriquest Mortgage

Co., 506 F.3d 525 (7th Cir. 2007); Handy v. Anchor Mortgage
Corp., 464 F.3d 760, 764 (7th Cir. 2006) (applying strict reading
of TILA requirements in a rescission case); Mars v. Spartanburg
Chrysler Plymouth, Inc., 713 F.2d 65 (4th Cir. 1983); Williamson
v. Lafferty, 698 F.2d 767, 768-69 (5th Cir. 1983)).]

Plaintiff

argues that this district court and others have ruled that
undated or improperly dated rescission notices violate TILA.
[Id. at 19-20 (some citations omitted) (citing Riopta v. Amresco
Residential Mort. Corp., 101 F. Supp. 2d 1326, 1330 (D. Haw.
1999) (an improperly dated rescission notice violated TILA and
imposed liability on the creditor); Williams v. Rickard, supra
(“Even a purely technical violation of TILA’s disclosure
provisions, including the failure to provide a borrower with a
copy of the notice that includes the correct date the rescission
period expires, extends the duration of the right to rescind for
three years.”); Smith v. Wells Fargo Cred. Corp., supra, 713 F.
Supp. at 356 (the correct date of rescission must be stated)).]
Plaintiff also points out that Judge Ezra considered
this issue in the 10/19/10 Summary Judgment Order and
“criticize[d] Palmer and Melfi and all but decide[d] this issue
in favor of Plaintiff[.]”

[Id. at 20-22 (quoting 10/19/10

Summary Judgment Order at 14-16).]

Judge Ezra found that there

was a genuine issue of material fact as to whether Plaintiff

17

would have rescinded the loan if she had been provided the Loan
Documents at closing, based in part on the inaccurate date on the
notices of right to rescind.
As to the UDAP claim, Plaintiff argues that the
pervasive, material representations in the subject transaction
are sufficient to establish that Countrywide engaged in unfair
and deceptive acts.

[Id. at 26-27.]

Plaintiff emphasizes that

the Hawai`i Supreme Court has applied § 480-2 to “bait and
switch” mortgage transactions.

[Id. at 27-28 (citing Hawaii

Community Fed. Credit Union v. Keka, 94 Haw. 213, 228-29, 11 P.3d
1, 16-17 (2000)).]

Plaintiff argues that Judge Ezra’s UDAP

ruling as to Fidelity Escrow do not apply to Countrywide because
Countrywide’s conduct is “qualitatively and quantitatively
different”.

[Id. at 29.]

BOA also cannot hide behind the

general contract rule that a party is bound by a contract she
signed because fraud is an exception to that rule and because
contract rules do not apply in Chapter 480 actions.

[Id. at 30

(citing Williams v. Rickard, 2011 U.S. Dist. LEXIS 56702, 23-24
(D. Haw. May 25, 2011)).]

As to BOA’s argument that Plaintiff

cannot establish damages, Plaintiff emphasizes that de minimis
damages are sufficient for a § 480-13 claim.

[Id. at 31 (citing

Wiginton v. Pacific Credit Corp., 2 Haw. App. 435, 634 P.2d 111
(1981); Zanakis-Pico v. Cutter Dodge, Inc., 98 Haw. 309, 47 P.3d
1222 (2002)).]

Further, Plaintiff asserts that she has suffered

18

various damages, including the amount her loan payments exceeded
what she was promised, and the undisclosed fees that she was
assessed at closing.

She also emphasizes that the absence of

injury would not preclude her Haw. Rev. Stat. § 480-12 claim.
[Id. at 31-32.]
Plaintiff argues that, for similar reasons, the record
supports her fraud claim against BOA.

She contends that the

issues that BOA raises merely illustrate that there are genuine
disputes of material fact regarding this claim.

[Id. at 33-34.]

Finally, Plaintiff argues that her conspiracy claim
against Countrywide is based on the fraud claims against
Countrywide and Loan Network and that the existence of a
conspiracy can be inferred from the allegations supporting those
claims.

Plaintiff argues that the evidence of a conspiracy

against those two entities is much stronger than the evidence
that Judge Ezra rejected against Fidelity Escrow.

[Id. at 35.]

Plaintiff argues that the normal business correspondence does not
negate the inference of a conspiracy.

[Id. at 37.]

Further, the

same facts also support the aiding and abetting claim.

[Id. at

38.]
Plaintiff therefore urges the Court to deny the BOA
Motion in its entirety.
B.

BOA’s Reply
In its Reply, BOA largely reiterates its arguments from

19

the BOA Motion.

In addition, BOA emphasizes that Plaintiff has

no authority for her position that Countrywide was required to
provide new rescission notices with a corrected expiration date.
BOA argues that this is contrary to the model forms, the staff
commentary in Regulation Z, and the First Circuit cases discussed
supra.

[BOA Reply at 2-4 (citing 12 C.F.R. pt. 226, Apps. H-8,

G-5; Supp. 1, App. G ¶ 4, App. H ¶ 11; Supp. 1, cmt. 5(c)(2)).]
BOA also argues that the 10/19/10 Summary Judgment Order clearly
stated that it was not ruling on the TILA claims, and therefore
it cannot be said to have rejected Palmer.

[Id. at 9.]

As to the fraud and UDAP claims, although Plaintiff
argues that Countrywide’s and Fidelity’s misconduct were
different, BOA points out that both allegedly misstated loan
terms and the loan costs.
set forth at closing.

Further, the actual terms were clearly

BOA notes that this district court

rejected a similar claim in McCarty v. GCP Management, LLC, No.
10-00133 JMS/KSC, 2010 WL 4812763 (D. Haw. Nov. 17, 2010).
at 10-11.]

[Id.

BOA argues that Hawaii Community Federal Credit Union

v. Keka is factually distinguishable.

[Id. at 12-13.]

As to the conspiracy and aiding and abetting claims,
BOA argues that Plaintiff’s evidence of agreement and knowledge
is merely hearsay and speculation and is not sufficient to defeat
summary judgment.

Further, Plaintiff’s claim that Countrywide

must have known about Loan Network’s misconduct is implausible

20

because Countrywide disclosed the proper loan terms and
instructed Fidelity Escrow to provide Plaintiff with the Loan
Documents.

[Id. at 15-16.]
BOA therefore urges the Court to grant its Motion in

its entirety.
II.

Fidelity Escrow’s Motion
Fidelity Escrow first notes that the three remaining

claims against it are all based upon the allegation that it was
obligated to provide the Loan Documents to Plaintiff as a thirdparty beneficiary of the closing instructions from Countrywide.
[Mem. in Supp. of Fidelity Escrow Motion at 1-2.]

According to

Fidelity Escrow, the following evidence has come to light since
the 10/19/10 Summary Judgment Order:
1.

2.
3.
4.
5.

6.
7.

Fidelity Escrow never received and did not
participate in the signing of the Loan
Documents generally or the Mortgage Documents
specifically;
Nothing in the Initial Instructions required
Fidelity Escrow to provide the Loan Documents
on February 1, 2007;
Fidelity Escrow provided Plaintiff with all
documents in its possession on February 1,
2007;
the Stantons were aware that the Loan had not
funded as late as February 8, 2007, but
failed to contact Fidelity Escrow;
Plaintiff’s claims as to Fidelity Escrow’s
limited role in the alleged loan origination
misconduct are premised on their assertion
that they should have received the Notes and
Mortgages specifically;
the Initial Instructions were superseded by
new Closing Instructions, dated February 6,
2007 (“Second Closing Instructions”); and
the Second Closing Instructions imposed no
21

contractual obligation on Fidelity Escrow to
provide the Mortgage Documents to
Plaintiff[.]
[Id. at 3-4.]

Fidelity Escrow argues that it satisfied its

fiduciary duties by providing Plaintiff with all of the documents
it had in its possession on February 1, 2007, and therefore it
cannot be liable for Plaintiff’s alleged failure to receive the
other documents.

Fidelity Escrow argues that, in light of these

new facts, the Court should grant summary judgment in its favor
on Counts VIII, XII, and XIV.

[Id. at 4.]

Fidelity Escrow notes that Plaintiff’s husband,
Timothy Stanton, was actively involved in the negotiation of the
loan.

[Id. at 5 (citing Fidelity Escrow CSOF, Exh. 9 (Trans.

Excerpts of 4/6/11 Depo. of Timothy Morris Stanton) at 66:7-17,
71:14-23, 123:21-124:2).]

Fidelity emphasizes the paragraph in

the Escrow Instructions quoted supra, pages 3-4.

[Id. at 6.]

Fidelity Escrow states that, on or around February 1, 2007,
Countrywide sent Fidelity Escrow agent Dorothy “Dot” Yoza the
“Initial Instructions”, which listed the “Loan Documents” that
were to be delivered to the “Settlement Agent”.7

The “Settlement

Agent” was either the “Signing Agent” or “any other person
directly or indirectly responsible for handling matters

7

The closing instructions for the first loan and the
closing instructions for the second loan are collectively the
“Initial Instructions”. [Mem. in Supp. of Fidelity Escrow Motion
at 2 n.3 (citing Fidelity Escrow CSOF, Exhs. 2, 3).]
22

associated with the signing, funding, disbursing, or recording of
the Loan.”

[Id. at 7.]

The “Signing Agent” was “the person or

entity directly responsible for ‘supervising the Signing of the
Loan Documents, including a Notary Public or any other individual
who conducts a witness closing.’”

[Id. (citing Fidelity Escrow

CSOF, Decl. of Dorothy “Dot” Yoza (“Yoza Decl.”), Exh. 2 (2/1/07
Closing Instructions for first loan), Exh. 3 (2/1/07 Closing
Instructions for second loan), Exh. 5 (2/5/07 email to Carolyn
and Tim from Dot Yoza)).]
Fidelity Escrow asserts that it was not the “Signing
Agent” and that Ms. Yoza neither received nor participated in the
signing of the Loan Documents.
¶ 8).]

[Id. at 7-8 (citing Yoza Decl. at

The Initial Instructions did require that the Loan

Documents be provided to the borrower at “signing” or in
accordance with other state requirements.

[Id. at 8 (citing

Fidelity Escrow CSOF, Yoza Decl., Exhs. 2, 3 at 17).]

Fidelity

Escrow, however, emphasizes that the “Signing Agent” and the
“Settlement Agent” had separate and distinct roles and
responsibilities.

[Id. (citing Yoza Decl. Exhs. 2, 3 at 18).]

Fidelity Escrow states that, on February 1, 2007,
Ms. Yoza requested Plaintiff’s signature on the only documents
Fidelity Escrow had in its possession: (1) the estimated HUD
statement; (2) the closing instructions; (3) the demand approval
for the prior lenders; (4) the preliminary report approval; and

23

(5) the Escrow Instructions.

[Id. at 9 (citing Yoza Decl. ¶ 9,

Exh. 4 (2/1/07 cover letter to Plaintiff from Dot Yoza)).]
Ms. Yoza informed Plaintiff and her husband that, as of
February 5, 2007, she had not been provided with the mortgage
documents.

She also informed them that it was her understanding

that the three-day rescission period would expire at midnight on
February 5, 2007.
Exh. 5).]

[Id. at 9-10 (citing Yoza Decl. at ¶¶ 10-11,

Fidelity Escrow argues that, because Ms. Yoza did not

have the Loan Documents and did not participate in the signing,
she could not have provided the documents to Plaintiff.
10 (citing Yoza Decl. at ¶ 12).]

[Id. at

Plaintiff’s husband understood

that the loan had not been funded as of February 6, 2007.

[Id.

at 11 (citing Yoza Decl., Exh. 9 at 204:1-22).]
On February 7, 2007, Ms. Yoza received the Second
Closing Instructions, which Fidelity Escrow states superseded the
First Closing Instructions and listed the Form 1003 loan
application as the only Loan Document.

[Id. (citing Yoza Decl.

at ¶¶ 15-16, Exh. 6 (2/6/07 Closing Instructions)).]

It required

that the Loan Document “had to be signed by February 7, 2007,
after which it expired, and imposed a document delivery
obligation only after the document was signed.”
Exh. 6 at 5, 17).]

[Id. (citing

Plaintiff’s loan closed on February 12, 2007.

Ms. Yoza sent Plaintiff a letter with the same date stating that
the cash proceeds were deposited into her checking account and

24

that a copy of the final HUD statement was enclosed.

[Fidelity

Escrow CSOF, Yoza Decl., Exh. 7 (letter dated 2/12/07 to
Plaintiff from Dot Yoza).]
Fidelity Escrow emphasizes that, although Plaintiff
received the Loan Documents by February 13, 2007, she did not
immediately exercise her right to cancel, and she did not file
the instant action until more than two and a half years later.
[Mem. in Supp. of Fidelity Escrow Motion at 13.]

Plaintiff’s

husband stated at his deposition that the basis for the legal
claims against Fidelity Escrow is the failure to provide the loan
notes and mortgages to Plaintiff.
Exh. 9 at 234:2-236:17).]

[Id. at 14 (citing Yoza Decl.,

Fidelity Escrow, however, asserts that

it did not have possession of these documents during the period
in question.

If Plaintiff did sign the mortgage documents on

February 1, 2007, she did not do so at Fidelity Escrow’s office.
[Id. at 18 (citing Yoza Decl. at ¶ 8).]
Fidelity Escrow emphasizes that the 10/19/10 Summary
Judgment Order recognized that Fidelity Escrow had no duty to
police the loan transaction.

[Id. at 19 & n.17 (some citations

omitted) (citing 10/19/10 Summary Judgment Order at 13).]

As a

fiduciary, Fidelity Escrow’s duties under the Escrow
Instructions8 were limited to responsibility for the documents it

8

The Loan Escrow Instructions Authorization Form, i.e. the
Escrow Instructions, which Plaintiff signed, is attached to the
(continued...)
25

actually received.

It only received a limited number of the Loan

Documents and delivered them in a timely manner to Plaintiff.
[Id. at 20-21 (citing Yoza Decl. at ¶ 9, Exh. 4).]
As to the third-party beneficiary argument under the
Initial Instructions, Fidelity Escrow was not the “Signing Agent”
and therefore was not required to provide documents to Plaintiff.
[Id. at 22-23.]

Further, the Second Closing Instructions

superceded the Initial Instructions, and the Second Closing
Instructions show that Fidelity Escrow had only a limited role in
the transaction.

[Id. at 23-24 (citing Exh. 6).]

Fidelity

Escrow argues that, under either version of the closing
instructions, it did not have a duty to provide the Loan
Documents to Plaintiff on February 1, 2007.

[Id. at 24.]

Fidelity Escrow therefore urges the Court to grant
summary judgment in its favor on all remaining counts against it.
A.

Plaintiff’s Opposition
Plaintiff argues that there are genuine issues of

material fact that preclude summary judgment.

Plaintiff has

expressly stated in her declaration that Ms. Yoza facilitated the
signing of the Loan Documents at Fidelity Escrow’s office.

[Mem.

in Opp. to Fidelity Escrow Motion at 1 (citing Fidelity Escrow
CSOF, Decl. of J. Blaine Rogers (“Rogers Decl.”), Exh. 13

8

(...continued)
Fidelity Escrow CSOF as Exhibit 1 to the Yoza Declaration.
26

(Pltf.’s Decl. attached to her CSOF in opp. to Fidelity Escrow
2010 Motion [dkt. no. 36-1]) at ¶¶ 13-18).]

Plaintiff also

testified at her deposition that she knew Ms. Yoza from another
loan document signing.

[Id. at 5 (citing Pltf.’s Fidelity Escrow

CSOF, Decl. of Colin A. Yost (“Yost Fidelity Escrow Decl.”), Exh.
A (Trans. Excerpts of 2/9/11 Depo. of Plaintiff) at 28:14-21).]
Further, the initial closing instructions state that the Loan
Documents were delivered to Fidelity Escrow.

They also identify

Fidelity Escrow as both the Settlement Agent and the Signing
Agent.

[Id. at 1 (citing Fidelity Escrow CSOF, Yoza Decl., Exh.

2 at 4).]
Plaintiff argues that the version of events which
Fidelity Escrow currently presents must have been known to it
when it filed the Fidelity Escrow 2010 Motion, but Fidelity
Escrow did not present these factual allegations at that time.
Plaintiff asserts that the Escrow Instructions and the Initial
Closing Instructions were broad enough to allow Fidelity Escrow
to assist with the signing of the Loan Documents.

[Id. at 9-11.]

Plaintiff argues that the Second Closing Instructions and
Ms. Yoza’s February 1, 2007 letter to Plaintiff are red herrings.
Plaintiff contends that no document, other than Ms. Yoza’s
declaration, establishes that the Second Closing Instructions
supercedes the Initial Closing Instructions.

Plaintiff asserts

that all three documents are consistent and can be read together.

27

[Id. at 11.]

Plaintiff also emphasizes that the HUD statement

Ms. Yoza sent Plaintiff was signed and dated by both Plaintiff
and Ms. Yoza on February 1, 2007.

Plaintiff argues that this

indicates that Plaintiff likely signed it in Ms. Yoza’s office on
February 1, 2007 with the other Loan Documents.

[Id. at 11-12

(citing Yost Fidelity Escrow Decl., Exh. B (Estimated HUD
Statement signed by Plaintiff and Fidelity Escrow dated
2/1/07)).]
Plaintiff therefore urges the Court to deny the
Fidelity Escrow Motion in its entirety.
B.

Fidelity Escrow’s Reply
In its Reply, Fidelity reiterates that its obligation

to provide the Loan Documents to Plaintiff was triggered by the
signing of the documents.

Plaintiff has not presented any

evidence to contradict Fidelity Escrow’s evidence that Ms. Yoza
did not participate in the signing of, or have possession of, the
Loan Documents.

[Fidelity Escrow Reply at 1-2.]

Fidelity Escrow argues that Plaintiff erroneously
frames the threshold issue as whether it facilitated the signing
of the Loan Documents.

Fidelity Escrow has presented evidence

that it owed no duty to provide the Loan Documents to Plaintiff
in the first instance.

[Id. at 2-3.]

Fidelity also argues that

Plaintiff has misconstrued the terms of the Escrow Instructions
and the Closing Instructions.

Plaintiff cannot spin the terms of

28

the contracts to overcome the fact that Fidelity Escrow was not
the Signing Agent and therefore had no duty to deliver the Loan
Documents.

[Id. at 5-9.]

Fidelity Escrow was responsible for

recording the relevant documents.
Fidelity Escrow emphasizes that Plaintiff cannot
remember what specific documents she signed on February 1, 2007.
[Id. at 10 (citing Rogers Decl., Exh. 13 at ¶¶ 13-15, 22-23).]
In contrast, Fidelity Escrow has submitted evidence that: it
provided her with specifically identified documents on
February 1, 2007; it did not participate in the signing of, nor
did it have possession of, the Loan Documents generally or the
Mortgage Documents specifically; and it provided Plaintiff with
the documents that it was contractually obligated to provide
her.9

[Id. at 10-11 (citing Yoza Decl., Exh. 4; Yoza Decl. at ¶

9

The Court notes that, at the hearing on the motions,
counsel for Fidelity Escrow presented argument about its role in
Plaintiff’s loan closing based on documents that Fidelity Escrow
did not cite in its moving papers or include in the Fidelity
Escrow CSOF. Fed. R. Civ. P. 56(c)(1) states, in pertinent part:
A party asserting that a fact cannot be or is
genuinely disputed must support the assertion by:
(A) citing to particular parts of materials
in the record, including depositions,
documents, electronically stored information,
affidavits or declarations, stipulations
(including those made for purposes of the
motion only), admissions, interrogatory
answers, or other materials[.]
Even if the documents are attached to other documents in the
record, this Court has the discretion to determine whether or not
(continued...)
29

8; Rogers Decl., Exh. 14 (Trans. Excerpts of 2/9/11 Depo. of
Plaintiff) at 121:10-12).]

Fidelity Escrow emphasizes that, if

Ms. Yoza had been involved in the signing of the Mortgage
Documents, she would not have been awaiting their completion by
the notary public.

[Id. at 12 (citing Yoza Decl., Exh. 5).]

Fidelity Escrow therefore urges the Court to grant its
motion.
STANDARD
Pursuant to Federal Rule of Civil Procedure 56(a), a
party is entitled to summary judgment “if the movant shows that
there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.”
Summary judgment must be granted against a
party that fails to demonstrate facts to establish
what will be an essential element at trial. See
Celotex [Corp. v. Catrett], 477 U.S. [317,] 323
[(1986)]. A moving party has both the initial
burden of production and the ultimate burden of
persuasion on a motion for summary judgment.
Nissan Fire & Marine Ins. Co. v. Fritz Cos., 210
F.3d 1099, 1102 (9th Cir. 2000). The burden
initially falls on the moving party to identify
for the court “those portions of the materials on
file that it believes demonstrate the absence of
any genuine issue of material fact.” T.W. Elec.
Serv., Inc. v. Pac. Elec. Contractors Ass’n, 809
F.2d 626, 630 (9th Cir. 1987) (citing Celotex
Corp., 477 U.S. at 323). “A fact is material if it
could affect the outcome of the suit under the
governing substantive law.” Miller [v. Glenn

9

(...continued)
to consider them. See Fed. R. Civ. P.(c)(3). This Court
declines to consider any documents that the parties failed to
attach to their concise statements.
30

Miller Prods., Inc.], 454 F.3d [975,] 987 [(9th
Cir. 2006)].
When the moving party fails to carry its
initial burden of production, “the nonmoving party
has no obligation to produce anything.” In such a
case, the nonmoving party may defeat the motion
for summary judgment without producing anything.
Nissan Fire, 210 F.3d at 1102-03. On the other
hand, when the moving party meets its initial
burden on a summary judgment motion, the “burden
then shifts to the nonmoving party to establish,
beyond the pleadings, that there is a genuine
issue for trial.” Miller, 454 F.3d at 987. This
means that the nonmoving party “must do more than
simply show that there is some metaphysical doubt
as to the material facts.” Matsushita Elec.
Indus. Co. v. Zenith Radio Corp., 475 U.S. 574,
586 (1986) (footnote omitted). The nonmoving
party may not rely on the mere allegations in the
pleadings and instead “must set forth specific
facts showing that there is a genuine issue for
trial.” Porter v. Cal. Dep’t of Corr., 419 F.3d
885, 891 (9th Cir. 2005) (quoting Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 256 (1986)).
“A genuine dispute arises if the evidence is such
that a reasonable jury could return a verdict for
the nonmoving party.” California v. Campbell, 319
F.3d 1161, 1166 (9th Cir. 2003); Addisu v. Fred
Meyer, Inc., 198 F.3d 1130, 1134 (9th Cir. 2000)
(“There must be enough doubt for a ‘reasonable
trier of fact’ to find for plaintiffs in order to
defeat the summary judgment motion.”).
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.” Miller, 454 F.3d at 988
(quotations and brackets omitted).
Rodriguez v. Gen. Dynamics Armament & Technical Prods., Inc., 696
F. Supp. 2d 1163, 1176 (D. Hawai`i 2010) (some citations
omitted).
DISCUSSION
I.

BOA’s Motion

31

A.

TILA Rescission Claims
Count I alleges that, as to the first loan, Countrywide

“failed to deliver to Plaintiff two copies of a notice of the
right to rescind as required by 15 U.S.C. § 1635(a) and 12 C.F.R.
§ 226.23(b)” and “failed to deliver to Plaintiff all ‘material’
disclosures as described in 12 C.F.R. § 226.23(a)(3) n.48.”
[First Amended Complaint at ¶¶ 85-86.]

She alleges that,

pursuant to § 1635(f) and § 226.23(a), she had three years after
the consummation of her loan to rescind the loan, and she
exercised her right to rescind within that time period.
¶¶ 87-88.]

[Id. at

Count III raises similar allegations as to the second

[Id. at ¶¶ 100-03.]

loan.

Plaintiff acknowledges that she received the 2/5/07
Cancellation Notices on or after February 12, 2007.
Decl. at ¶ 36, Exhs. 4 & 5.]

[Stanton BOA

Plaintiff also acknowledges that a

creditor may deliver the notice of the right to rescind after
consummation of the loan.

[Mem. in Opp. to BOA Motion at 14

(citing 12 C.F.R. §§ 226.15(b), 226.23(b)).10]

10

Plaintiff,

Section 226.23 (regarding closed-end credit) states:
(1) Notice of right to rescind. In a transaction
subject to rescission, a creditor shall deliver
two copies of the notice of the right to rescind
to each consumer entitled to rescind (one copy to
each if the notice is delivered in electronic form
in accordance with the consumer consent and other
applicable provisions of the E–Sign Act). The
notice shall be on a separate document that
(continued...)
32

however, argues that the 2/5/07 Cancellation Notices did not
satisfy TILA’s requirement that a creditor provide an obligor
notice of her right rescind because they “did not state the
specific date on which her right to rescind would have expired,
i.e., three business days after the date on which the notices
were actually given to her.”

[Mem. in Opp. to BOA Motion at 14

(emphasis in original).]
The Official Staff Interpretations of Regulation Z
state:
The notice required by § 226.23(b) need not be
given before consummation of the transaction. The
creditor may deliver the notice after the
transaction is consummated, but the rescission
period will not begin to run until the notice is
given. For example, if the creditor provides the
notice on May 15, but disclosures were given and
10

(...continued)
identifies the transaction and shall clearly and
conspicuously disclose the following:
(i) The retention or acquisition of a
security interest in the consumer’s principal
dwelling.
(ii) The consumer’s right to rescind the
transaction.
(iii) How to exercise the right to rescind,
with a form for that purpose, designating the
address of the creditor’s place of business.
(iv) The effects of rescission, as described
in paragraph (d) of this section.
(v) The date the rescission period expires.
(2) Proper form of notice. To satisfy the
disclosure requirements of paragraph (b)(1) of
this section, the creditor shall provide the
appropriate model form in Appendix H of this part
or a substantially similar notice.
§ 226.23(b); see also § 226.15(b) (same for open-end credit).
33

the transaction was consummated on May 10, the
3–business day rescission period will run from May
15.
12 C.F.R. Pt. 226, Supp. I ¶ 23(b)(4) (emphasis added); see also
¶ 15(a)(4) (same for open-end credit).

The issue in this case is

whether the 2/5/07 Cancellation Notices triggered the three-day
rescission period.
BOA contends that the 2/5/07 Cancellation Notices were
effective, and therefore Plaintiff’s rescission period expired on
midnight of the third business day after she received the 2/5/07
Cancellation Notices, which Plaintiff states happened “on or
after February 12, 2007[.]”

[Stanton BOA Decl. at ¶ 36.]

BOA

urges the Court to apply Palmer v. Champion Mortgage, in which
the First Circuit held that a similar cancellation notice
“complied with the applicable TILA requirements.”
31 (1st Cir. 2006).

465 F.3d 24,

Similar to the instant case, the plaintiff,

Amy Palmer, entered into a loan secured by a mortgage on her
residence, and she left the March 28, 2003 closing without copies
of the documents she executed.

Palmer received copies of the

loan documents in the mail several days later.

Id. at 25-26.

Palmer’s notice of right to cancel contained virtually identical
language to the 2/5/07 Cancellation Notices.

In particular, it

stated: “If you cancel by mail or telegram, you must send the
notice no later than midnight of APRIL 01, 2003 (or midnight of
the third business day following the latest of the three (3)

34

events listed above).”

Id. at 26.

Palmer did not remember the

exact date she received the loan documents in the mail, but it
was sometime after April 1, 2003.

Id.

In holding that the

notice was clear and did not trigger the extended three-year
rescission period, the First Circuit stated:
Although the Notice does state in part that
rescission has to occur “no later than midnight of
APRIL 01, 2003,” the plaintiff wrests this
statement from its contextual moorings. The
statement is followed immediately by a
parenthetical reading “(or midnight of the third
business day following the latest of the three (3)
events listed above).” We fail to see how any
reasonably alert person-that is, the average
consumer-reading the Notice would be drawn to the
April 1 deadline without also grasping the
twice-repeated alternative deadlines.
Id. at 28-29.

BOA contends that Palmer is indistinguishable and

that this Court should follow Palmer and other similar cases.
Further, BOA emphasizes that 15 U.S.C. § 1635(h), which
was enacted in 1995, states:
An obligor shall have no rescission rights arising
solely from the form of written notice used by the
creditor to inform the obligor of the rights of
the obligor under this section, if the creditor
provided the obligor the appropriate form of
written notice published and adopted by the Board,
or a comparable written notice of the rights of
the obligor, that was properly completed by the
creditor, and otherwise complied with all other
requirements of this section regarding notice.
BOA notes that this amendment, and others, “were aimed in general
to guard against widespread rescissions for minor violations[,]”
and they indicate that “Congress has now leaned against a penalty

35

approach and, perhaps, weakened the present force of the older
case law favoring extension of the rescission deadline.”

Melfi

v. WMC Mortg. Corp., 568 F.3d 309, 313 (1st Cir. 2009).
Plaintiff responds that this Court should not follow
Palmer and Melfi because those cases are contrary to Semar v.
Platte Valley Federal Savings & Loan Ass’n, 791 F.2d 699 (9th
Cir. 1986), which the Ninth Circuit has never disturbed.
Semars signed their loan documents on July 16, 1982.
F.2d at 701.

The

Semar, 791

“Platte Valley’s form omitted the expiration date,

although it stated that the rescission right expired three
business days after July 16.
technical violation of TILA.”

Platte Valley concedes this
Id. at 702 (footnote omitted).

In

affirming the district court’s ruling that the Semars were
entitled to rescission, the Ninth Circuit emphasized that TILA
applies to all consumers, not only to sympathetic consumers.
at 704-05.
TILA and Reg Z contain detailed disclosure
requirements for consumer loans. A lender’s
violation of TILA allows the borrower to rescind a
consumer loan secured by the borrower’s primary
dwelling. 15 U.S.C. § 1635(a). Technical or
minor violations of TILA or Reg Z, as well as
major violations, impose liability on the creditor
and entitle the borrower to rescind. “To insure
that the consumer is protected . . . [TILA and Reg
Z must] be absolutely complied with and strictly
enforced.” Mars v. Spartanburg Chrysler Plymouth,
Inc., 713 F.2d 65, 67 (4th Cir. 1983) (holding
that technical violation, even if merely a “minor
variation in language and type size” from TILA
requirements, imposes liability); see also Huff v.
36

Id.

Stewart-Gwinn Furniture Co., 713 F.2d 67, 69 (4th
Cir. 1983) (minor violations of TILA and Reg Z
impose liability even if, as creditor alleged,
consumer “was not misled and was given a
meaningful and correct disclosure of crucial
credit terms”).
Reg Z “makes clear that failure to fill in
the expiration date of the rescission form is a
violation of the TILA.” Williamson v. Lafferty,
698 F.2d 767, 768-69 (5th Cir. 1983). Williamson
held that the omission of the expiration date,
though a purely technical violation of TILA,
entitled the plaintiff to rescind the loan
agreement for up to three years, without regard to
whether the omission was material. Id. at 768;
see also Aquino v. Public Finance Consumer
Discount Co., 606 F. Supp. 504, 507 (E.D. Pa.
1985) (omission of expiration date of rescission
right gives borrower right to rescind loan).
Id. at 703-04 (footnotes omitted) (alterations in Semar)
(emphasis added).
Even though the Ninth Circuit decided Semar in 1986,
prior to the 1995 amendments, the Ninth Circuit continues to
adhere to the principles in Semar.

See, e.g., Rubio v. Capital

One Bank, 613 F.3d 1195, 1199 (9th Cir. 2010) (quoting Hauk v. JP
Morgan Chase Bank USA, 552 F.3d 1114, 1118 (9th Cir. 2009);
Jackson v. Grant, 890 F.2d 118, 120 (9th Cir. 1989)).

Further,

this Court rejects BOA’s argument that § 1635(h) impliedly
superceded Semar.

The Court agrees with the reasons stated in

Bakker v. Wells Fargo Home Mortgage:
There is no indication that the Ninth Circuit
considers Semar to have been overruled by the
statute, nor does the language of the statute
support such a conclusion. In addition, the
requirement remains that the expiration date of
the right to rescind must be set forth “clearly
37

and conspicuously in writing, in a form that the
consumer may keep.” 12 C.F.R. § 226.17.
(emphasis added).
No. CV–10–82–HU, 2011 WL 1124041, at *4 (D. Or. Feb. 28, 2011).11
The Court therefore concludes that Semar is still binding Ninth
Circuit precedent and, to the extent that Melfi suggests that the
1995 TILA amendments weakened Semar and other similar cases, this
Court declines to apply Melfi.
BOA also emphasizes that it used a model disclosure
form published by the Board, and BOA argues that this is deemed
to be compliance with the applicable disclosures.
2-3 (citing 15 U.S.C. §§ 1604(b), 1635(h)).]

[BOA Reply at

Section 1604(b)

states, in pertinent part:
A creditor or lessor shall be deemed to be in
compliance with the disclosure provisions of this
subchapter with respect to other than numerical
disclosures if the creditor or lessor (1) uses any
appropriate model form or clause as published by
the Board, or (2) uses any such model form or
clause and changes it by (A) deleting any
information which is not required by this
subchapter, or (B) rearranging the format, if in
making such deletion or rearranging the format,
the creditor or lessor does not affect the
substance, clarity, or meaningful sequence of the
disclosure.
BOA points out that the Board’s model forms,12 which the 2/5/07

11

This citation refers to the magistrate judge’s findings
and recommendation to deny the defendants’ motion to dismiss,
which the district judge adopted. 2011 WL 1102844 (D. Or. Mar
25, 2011).
12

See 12 C.F.R. Pt. 226, Appx. H, H-8 Rescission Model Form
(continued...)
38

Cancellation Notices are based upon, address the possibility that
notice may be delivered late or that the date provided for the
transaction date may be an estimate.

[BOA Reply at 3-4 (quoting

12 C.F.R. pt. 226, Supp. 1, App. G ¶ 4, App. H ¶ 11).]
The Official Staff Interpretations for Model Form H-8
note that:
The last paragraph of [the] model form contains a
blank for the date by which the consumer’s notice
of cancellation must be sent or delivered. A
parenthetical is included to address the situation
in which the consumer’s right to rescind the
transaction exists beyond 3 business days
following the date of the transaction, for
example, where the notice or material disclosures
are delivered late or where the date of the
transaction in paragraph 1 of the notice is an
estimate. The language of the parenthetical is
not optional.
12 C.F.R. Pt. 226, Appx. H, ¶ 11; see also id., Appx. G, ¶ 4
(same for Model Form G-5).

BOA is correct that the Official

Staff Interpretations clearly contemplate the possibility of a
lender using an estimated date for the closing date or of a
borrower receiving the disclosure late, and that § 1604(b) deems
use of the appropriate model form to be compliance with the TILA
disclosure provisions.

This, however, does not end the inquiry.

Although Section 1604 deems a lender in
compliance with non-numeric disclosures as a
matter of form if a lender uses a model form or a
substantially similar version, an interpretation

12

(...continued)
(General) (for closed end loans); id., Appx. G, G-5 Rescission
Model Form (When Opening an Account) (for open-end loans).
39

of the statute as shielding lenders from liability
for errors of substance in completing the model
form contradicts the statute’s requirement of
accurate disclosures. Section 1604 may prevent a
borrower from contending that a part of the model
form was confusing or unclear. It does not,
however, prevent a borrower from asserting a claim
on the ground that the lender did not accurately
fill out the form as required by the statute. In
fact, § 1635(h) provides the protection afforded
to a lender for use of the proper form of notice
of the right to rescind applies only if the form
is “properly completed by the creditor, and [the
creditor] otherwise complied with all other
requirements of this section regarding notice.”
Barnes v. Chase Home Finance, LLC, No. 11–CV–142–PK, 2011 WL
4950111, at *13 (D. Or. Oct. 18, 2011) (emphasis and alteration
in original).

This Court agrees with the reasoning in Barnes.

In spite of the use of the model forms in this case, Plaintiff
may still assert a claim that the three-year rescission period
applied because, under the specific circumstances of the
transactions at issue, Plaintiff did not receive clear and
conspicuous notice of her right to cancel.

Whether the

disclosures that Plaintiff received were clear and conspicuous is
a question of fact that is not appropriate for summary judgment.
The Court therefore DENIES BOA’s Motion as to Count I
and Count III, Plaintiff’s TILA rescission claims.
B.

TILA Damages Claims
Plaintiff alleges that she exercised her right to

rescind both the first loan and the second loan pursuant to TILA.
[First Amended Complaint at ¶¶ 88, 103.]

40

Count II and Count IV

seek damages for BOA’s failure to allow rescission.
94-95, 109-10.]

[Id. at ¶¶

Insofar as Plaintiff has raised a genuine issue

of fact as to whether the three-year rescission period applies,
there is also a genuine issue of material fact as to Plaintiff’s
claims that she is entitled to damages because BOA failed to
honor the exercise of her rescission rights.

The Court therefore

DENIES BOA’s Motion as to Count II and Count IV, Plaintiff’s TILA
damages claims.
C.

UDAP
Count VI alleges a UDAP claim against BOA based on a

myriad of actions and representations that Countrywide allegedly
engaged in with respect to the origination of the subject loans.
[First Amended Complaint at ¶¶ 120.(1)-(20).]

The applicable

standard is set forth in the 10/19/10 Summary Judgment Order.
Stanton, 2010 WL 4176375, at *10-11.

In particular, this Court

emphasizes that the test for a deceptive act or practice is an
objective, reasonable person standard, “turning on whether the
act or omission ‘is likely to mislead consumers,’ as to
information ‘important to consumers,’ in making a decision
regarding the product or service.”

Id. at *11 (quoting Tokuhisa

v. Cutter Mgmt. Co., 122 Hawai`i 181, 195, 223 P.3d 246, 260 (Ct.
App. 2009)).
First, to the extent that Plaintiff bases her UDAP
claim on the alleged TILA violations, [First Amended Complaint at

41

¶¶ 120.(19), (20),] TILA preempts those claims.

See Kajitani v.

Downey Sav. & Loan Ass’n, F.A., 647 F. Supp. 2d 1208, 1220 (D.
Hawai`i 2008).

BOA is therefore entitled to summary judgment as

to the portion of Count VI based on the alleged attempt to
deprive Plaintiff of her right to cancel the loans.

Second, to the extent that Plaintiff bases her UDAP
claim against BOA on allegations that Countrywide did not
consider her ability to repay the loans or whether she qualified
for a more favorable loan program, those claims also fail.

This

district court has recognized that
“lenders generally owe no duty to a borrower ‘not
to place borrowers in a loan even where there was
a foreseeable risk borrowers would be unable to
repay.’” McCarty v. GCP Mgmt., LLC, 2010 WL
4812763, at *6 (D. Haw. Nov. 17, 2010) (quoting
Champlaie v. BAC Home Loans Servicing, LP, 706 F.
Supp. 2d 1029, 1061 (E.D. Cal. 2009)). See also
Sheets v. DHI Mortg. Co., 2009 WL 2171085, at *4
(E.D. Cal. July 20, 2009) (reasoning that no duty
exists “for a lender ‘to determine the borrower’s
ability to repay the loan. . . . The lender’s
efforts to determine the creditworthiness and
ability to repay by a borrower are for the
lender’s protection, not the borrower’s.’”
(quoting Renteria v. United States, 452 F. Supp.
2d 910, 922–23 (D. Ariz. 2006)).
“[A]s a general rule, a financial institution
owes no duty of care to a borrower when the
institution’s involvement in the loan transaction
does not exceed the scope of its conventional role
as a mere lender of money.” Nymark v. Heart Fed.
Sav. & Loan Ass’n, 283 Cal. Rptr. 53, 56 (Cal. Ct.
App. 1991). Nothing in the Complaint indicates
that any Defendant “exceed[ed] the scope of [a]
conventional role as a mere lender of money.” The
claims fail on that basis alone.
42

Casino v. Bank of Am., Civil No. 10–00728 SOM/BMK, 2011 WL
1704100, at *12-13 (D. Hawai`i May 4, 2011) (alterations in
Casino).

Plaintiff’s declaration stating that Robin Lefcourt,

who was working for Loan Network at the time, used to work at
Countrywide’s Honolulu office and Ms. Lefcourt represented that
she could use her connections at Countrywide on Plaintiff’s
behalf is not enough to create a genuine issue of material fact
as to whether Countrywide exceeded the scope of its conventional
role as a mere money lender.

Plaintiff has not presented any

evidence Countrywide actively participated in Plaintiff’s
financial activity.

See Nymark, 283 Cal. Rptr. at 57 (“The

success of the [borrower’s] investment is not a benefit of the
loan agreement which the [lender] is under a duty to
protect . . . .

Liability to a borrower for negligence arises

only when the lender actively participates in the financed
enterprise beyond the domain of the usual money lender.”
(citations, quotation marks, and footnote omitted) (some
alterations in original)).

BOA is therefore entitled to summary

judgment as to the portion of Count VI based on the allegations
regarding Plaintiff’s ability to repay and the structuring of
Plaintiff’s loan program to obtain additional interest.
The remainder of the allegations supporting Plaintiff’s
UDAP claim against BOA assert that Countrywide misrepresented the
terms of Plaintiff’s loans.

[First Amended Complaint at ¶¶

43

120.(3)-(18).]

Even accepting, for purposes of the BOA Motion,

that Countrywide provided Plaintiff with the 1/2/07 Good Faith
Estimates, the documents that Plaintiff states she signed on
February 1, 2007 fully disclosed the terms of the loans.
Plaintiff states that, at the time she signed the documents, she
did not realize the terms were different from those in the 1/2/07
Good Faith Estimates because Ms. Yoza only presented her with
“the signature pages of various documents (some of which were
multiple page documents)” and she did not allow Plaintiff time to
review the documents.

[Stanton BOA Decl. at ¶ 19.]

In the

instant motion, it is not for the Court to weigh the credibility
of Plaintiff’s testimony.

See Anderson v. Liberty Lobby, Inc.,

477 U.S. 242, 255 (“Credibility determinations, the weighing of
the evidence, and the drawing of legitimate inferences from the
facts are jury functions, not those of a judge . . . ruling on a
motion for summary judgment.”).

Even if the Court assumes that

Plaintiff only saw the signature pages of the documents she
signed, among the documents that she signed were two Good Faith
Estimates dated January 31, 2007 (“1/31/07 Good Faith
Estimates”), each of which is a one-page document.
The key terms of the loans, which Plaintiff alleges
Countrywide made false representations about or failed to
disclose, are set out in the 1/31/07 Good Faith Estimates:
•Instead of the conventional loans promised in the 1/2/07 Good
Faith Estimates, the first loan is a “Payoption Arm” and the
44

second loan is a “HELOC”.
•The estimated monthly principal and interest payment is
$11,533.70 for the first loan and $10,480.22 for the second
loan, not $4,840.67 and $1,289.03 as stated in the 1/2/07
Good Faith Estimates.
•The interest rate is 8.500% for the first loan and 10.625% for
the second loan, not 6.50% and 6.00% as stated in the 1/2/07
Good Faith Estimates.
•The 1/31/07 Good Faith Estimates disclose the YSP paid to the
mortgage broker.
•The term of the second loan is thirty years, not fifteen years
as stated in the 1/2/07 Good Faith Estimate.
•The 1/31/07 Good Faith Estimate for the first loan includes the
$488.00 appraisal fee and the $700 field/desk review
appraisal fee, whereas the 1/2/07 Good Faith Estimate stated
that the appraisal fee was $0.00.
[Pltf.’s BOA CSOF, Exhs. 1-2; BOA CSOF, Exhs. F-G.]

Thus, even

accepting Plaintiff’s statement that she was only given the
signature pages of documents to sign, Plaintiff could have, and
should have, seen these terms, which are clearly set forth in the
one-page 1/31/07 Good Faith Estimates.

The only alleged failure

to disclose in paragraph 120 of the First Amended Complaint that
is not readily apparent from the applicable 1/31/07 Good Faith
Estimate is Plaintiff’s allegation that Countrywide “[f]ail[ed]
to disclose that making the required payments in the First Loan
would result in negative amortization.”
at ¶ 120.(8).]

[First Amended Complaint

The negative amortization of a loan is

information that is important to consumers and is likely to
affect their decision regarding a loan product.

Viewing the

evidence currently before the Court in the light most favorable
to Plaintiff, this Court finds that there is a genuine issue of
material fact as to whether a reasonable person would have been
45

mislead under the circumstances about the negative amortization
of the first loan.

Plaintiff states in her declaration that she

would not have agreed to the loans if she had been aware of the
unfavorable terms in general.

[Stanton BOA Decl. at ¶ 34.]

Viewing the evidence in the light most favorable to Plaintiff,
BOA has not carried its burden of establishing that it is
entitled to summary judgment on Plaintiff’s UDAP claim based on
the failure to disclose the negative amortization in the first
loan.
Plaintiff has not carried her burden of establishing
that there is a genuine issue of material fact that Countrywide’s
alleged false representations and alleged failures to disclose
information in paragraphs 120.(3)-(7) and (9)-(18) were likely to
mislead reasonable consumers.

This Court acknowledges that “the

application of an objective ‘reasonable person’ standard . . . is
ordinarily for the trier of fact, rendering summary judgment
‘often inappropriate.’”

Stanton, 2010 WL 4176375, at *11

(quoting Tokuhisa, 223 P.3d at 260).

The Intermediate Court of

Appeals, however, noted in Tokuhisa that:
Reasonableness can only constitute a question of
law suitable for summary judgment when the facts
are undisputed and not fairly susceptible of
divergent inferences because [w]here, upon all the
evidence, but one inference may reasonably be
drawn, there is no issue for the jury. [A]
question of interpretation is not left to the
trier of fact where evidence is so clear that no
reasonable person would determine the issue in any
way but one.
46

122 Hawai`i 181, 195, 223 P.3d 246, 260 (quoting Courbat v.
Dahana Ranch, Inc., 111 Hawai`i 254, 263, 141 P.3d 427, 436
(2006)) (alterations in original) (citations and internal
quotation marks omitted).

In the instant case, the contents of

the 1/31/07 Good Faith Estimates, one-page documents that
Plaintiff signed on February 1, 2007, are not disputed.

Further,

the contents of the 1/31/07 Good Faith Estimates are not
susceptible of divergent inferences.

This Court finds that there

is no triable issue of material fact as to these allegations
because no reasonable person would find that the relevant terms
set forth in the 1/31/07 Good Faith Estimates constituted
deceptive acts or practices.

BOA is therefore entitled to

summary judgment on Plaintiff’s UDAP claim based on the
allegations in paragraphs 120.(3)-(7) and (9)-(18).
The BOA Motion is DENIED as to the portion of Count VI
based on the alleged failure to disclose the negative
amortization in the first loan.

The BOA Motion is GRANTED as to

all other allegations in Count VI.
D.

Fraud
Count IX alleges a fraud claim against BOA based on

some of the same allegedly false representations that Countrywide
made about what the terms of the loans would be.

[First Amended

Complaint at ¶¶ 146-53.]
Under Hawai`i law, the elements of a fraudulent or

47

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,

Roehrig, Wilson & Hara, 122 Hawai`i 461, 482-483, 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 to support a finding of fraud, the plaintiff must establish
these elements by clear and convincing evidence.

See, e.g.,

Hawaii’s Thousand Friends, 70 Haw. at 286, 768 P.2d at 1301
(citation omitted).
Plaintiff asserts that, prior to closing, Countrywide
made false representations about the terms of loans it was
offering her.

She further alleges that Countrywide: knew the

representations were false or that it lacked knowledge of their
truth or falsity; and made the false representations in
contemplation of Plaintiff’s reliance on them.
Under Hawai`i law, the false representation forming the
basis of a fraud claim “must relate to a past or existing
material fact and not the occurrence of a future event.”

Joy A.

McElroy, M.D., Inc. v. Maryl Group, Inc., 107 Hawai`i 423, 433,
114 P.3d 929, 939 (Ct. App. 2005) (citations and block quote
format omitted) (emphasis in original).

48

Further, even if the

allegations satisfy the other elements of a fraud claim, “[f]raud
cannot be predicated on statements which are promissory in their
nature, or constitute expressions of intention, and an actionable
representation cannot consist of mere broken promises,
unfulfilled predictions or expectations, or erroneous conjectures
as to future events[.]”

Id. (citations and block quote format

omitted) (emphasis in original).

The exception to this general

rule is that “[a] promise relating to future action or conduct
will be actionable, however, if the promise was made without the
present intent to fulfill the promise.”

Id. (citations and block

quote format omitted) (emphasis in McElroy).
Even assuming that Countrywide, through Loan Network,
provided Plaintiff with the 1/2/07 Good Faith Estimates, the
representations about the proposed loan terms therein were merely
promissory in nature or expressions of intention.

Plaintiff

cannot recover on a fraud claim based on the failure to fulfill
those promises or intentions unless she can prove that, when
Countrywide made those representations, it did not have the
present intent to fulfill them.

Plaintiff has not presented any

evidence that would create a genuine issue of fact as to
Countrywide’s intent.

BOA is therefore entitled to summary

judgment on Plaintiff’s fraud claim.
as to Count IX.
E.

Civil Conspiracy

49

The BOA Motion is GRANTED

Count XI, Plaintiff’s civil conspiracy claim, alleges
that Countrywide, Loan Network, and Fidelity Escrow conspired to
accomplish the fraud upon Plaintiff alleged in Count IX and Count
X (the fraud claim against Loan Network).
Complaint at ¶¶ 181-82.]

[First Amended

Judge Ezra granted summary judgment in

favor of Fidelity Escrow, finding that Plaintiff had only
produced communications in the normal course of business between
Fidelity Escrow and Loan Network and that she had failed to prove
any facts showing that there was an illegal objective to those
communications.

Stanton, 2010 WL 4176375, at *19.

As Judge Ezra stated in the 10/19/10 Summary Judgment
Order,
“‘the accepted definition of a conspiracy is a
combination of two or more persons [or entities]
by concerted action to accomplish a criminal or
unlawful purpose, or to accomplish some purpose
not in itself criminal or unlawful by criminal or
unlawful means.’” Robert’s Haw. Sch. Bus, Inc. v.
Laupahoehoe Transp. Co., Inc., 982 P.2d 853, 881
n.28 (Haw. 1999) (quoting Duplex Printing Press
Co. v. Deering, 254 U.S. 443, 466 (1921))
(alteration in original). The plaintiff must
allege an underlying actionable claim because
“there can be no civil claim based upon a
conspiracy alone . . . .” Weinberg v. Mauch, 890
P.2d 277, 286 (1995).
“A conspiracy is constituted by an agreement
. . . No formal agreement between the parties is
essential to the formation of the conspiracy, for
the agreement may be shown if there be concert of
action, all the parties working together
understandingly, with a single design for the
accomplishment of a common purpose.” Marino v.
United States, 91 F.2d 691, 694 (9th Cir. 1937);
The existence of the joint assent of the
parties need not be proved directly. Like
50

any other ultimate fact, it may be found as
an inference from facts proved. It is enough
if the evidentiary facts and
circumstances-pieced together and considered
as a whole-convince the judicial mind that
the parties united in an understanding way to
accomplish the fraudulent scheme.
Kazuo Hashimoto v. Halm, NO. 2847, 1953 WL 7576,
at *5 (Haw. Terr. Nov. 20, 1953); State v.
Yoshida, 361 P.2d 1032, 1042 (1961) (“[t]he
existence of a conspiracy may be inferred from the
circumstances.”).
In Vieux v. East Bay Regional Park Dist., 906
F.2d 1330, 1343 (9th Cir. 1990), the Ninth Circuit
upheld summary judgment in favor of defendants
because plaintiff was unable to provide specific
evidence that the defendants agreed among
themselves to act against the plaintiff for an
unlawful purpose. Id. In Vieux, the plaintiff’s
evidence of “correspondence or discussions”
between the defendants was insufficient because no
“illegal objective” was demonstrated. Id.
Id. at *18-19 (some citations omitted) (alterations in original).
This Court has ruled that BOA is entitled to summary
judgment on Count IX.

Thus, Plaintiff’s derivative conspiracy

claim can only be based on Count X, which alleges fraud by Loan
Network.

Even assuming that Loan Network committed fraud in its

representations to Plaintiff about the terms of the loans, in
order to prevail on her conspiracy claim against BOA, Plaintiff
must establish an agreement or an understanding between
Countrywide and Loan Network to accomplish Loan Network’s
fraudulent scheme.

Plaintiff has only presented: the 1/2/07 Good

Faith Estimates that she states Loan Network provided her from
Countrywide; [Stanton BOA Decl. at ¶¶ 11, 13; Exhs. 1-2;] and her

51

declaration stating that Robin Lefcourt, Plaintiff’s Loan Network
mortgage broker, represented that she used to work at Countrywide
and that “her connections would enable her to obtain a financing
‘deal’ even though Mr. Ramos had been unsuccessful in doing so”
[Stanton BOA Decl. at ¶ 7].

The production of good faith estimates by Countrywide
through Loan Network, as Judge Ezra noted regarding
communications between Loan Network and Fidelity, “involve[d] the
normal course of business regarding the transaction, and there
are no facts to show that there was an ‘illegal objective’ to
such communications.”

Stanton, 2010 WL 4176375, at *19.

Even if

Loan Network fraudulently represented the terms of the loans
Countrywide was offering Plaintiff, “‘mere acquiescence or
knowledge is insufficient to constitute a conspiracy, absent
approval, cooperation or agreement.’”

Id. (quoting Robert’s

Hawai`i, 982 P.2d at 889 n.44).
Further, Ms. Lefcourt’s promise to use her connections
at Countrywide to obtain financing for Plaintiff does not
constitute evidence that Countrywide had an agreement or an
understanding to accomplish a fraudulent scheme with Loan
Network.

Even assuming that Ms. Lefcourt did in fact use her

contacts at Countrywide to obtain a loan where another Loan
Network mortgage broker had previously failed to do so, this does

52

not constitute evidence that Countrywide had an agreement or an
understanding to accomplish a fraudulent scheme with Loan
Network.

Plaintiff has failed to establish a genuine issue of

material fact as to her civil conspiracy claim against BOA.

The

BOA Motion is therefore GRANTED as to Count XI.

F.

Aiding and Abetting
Count XII alleges that Defendants aided and abetted

each other in the wrongful acts alleged in Counts V through X.
[First Amended Complaint at ¶¶ 185-88.]

As to BOA, Plaintiff

alleges that it is liable because “Countrywide aided and abetted
Loan Network and/or Fidelity in connection with violating H.R.S.
Chapter 480 or committing fraud.”
38.]

[Mem. in Opp. to BOA Motion at

The Court notes that Plaintiff did not allege a fraud claim

against Fidelity Escrow, and the only Chapter 480 claim remaining
against Fidelity Escrow is the claim based on the failure to
provide the Loan Documents to Plaintiff in a timely manner.
In the 10/19/10 Summary Judgment Order, Judge Ezra
found that “Restatement (Second) of Torts § 876(b) and (c), as
also elaborated upon by California case law, provides the
appropriate law by which to assess” Plaintiff’s aiding and
abetting claim.

Stanton, 2010 WL 4176375, at *15.

The

Restatement (Second) of Torts § 876 states, in pertinent part:
For harm resulting to a third person from the
tortious conduct of another, one is subject to
53

liability if he
. . . .
(b) knows that the other’s conduct
constitutes a breach of duty and gives
substantial assistance or encouragement to
the other so to conduct himself, or
(c) gives substantial assistance to the other
in accomplishing a tortious result and his
own conduct, separately considered,
constitutes a breach of duty to the third
person.
The 10/19/10 Summary Judgment Order also noted:
As to the first test for aiding and abetting
requiring knowledge that the other’s alleged
conduct constituted a breach of duty, the court in
Casey v. U.S. Bank Nat’l Ass’n, 127 Cal. App. 4th
1138, 1144 (2005) found that to satisfy the
knowledge prong, the defendant must have “actual
knowledge of the specific primary wrong the
defendant substantially assisted.” Id. at 406;
see also Central Bank of Denver, N.A. [v. First
Interstate Bank of Denver], 511 U.S. 164[, 181
(1994)] (quoting the Restatement (Second) of Torts
§ 876(b)).
Stanton, 2010 WL 4176375, at *16.

Judge Ezra noted that the

Hawai`i Supreme Court would likely agree with the actual
knowledge standard, based on its decision in In re Bishop,
Baldwin, Rewald, Dillingham & Wong, Inc., 69 Haw. 523, 751 P.2d
77 (1988), and the fact that Hawai`i courts generally look to
California law for guidance when there is no Hawai`i precedent on
a particular issue.

Id. at *15-16.

Judge Ezra’s determination

of the standard applicable to Plaintiff’s aiding and abetting
claim is the law of the case and, moreover, this Court agrees
with his analysis.

This Court will therefore apply the same

standard to the instant motions.
54

As to the first test, Plaintiff contends that the same
evidence that supports her civil conspiracy claim satisfies the
knowledge prong.

This Court has already ruled that Plaintiff’s

evidence does not raise a genuine issue of material fact as to
whether Countrywide had an agreement or an understanding to
accomplish a fraudulent scheme with Loan Network.

Similarly, the

Court also finds that the mere provision of good faith estimates
and the fact that Ms. Lefcourt represented that she could use her
contacts at Countrywide to secure a loan for Plaintiff do not
raise a genuine issue of material fact that Countrywide had
actual knowledge of Loan Network’s alleged Chapter 480 violations
and fraud.

Plaintiff also emphasizes that her provision of her

financial information to Countrywide establishes that it had
knowledge of her ability to pay.

As previously noted, however,

lenders do not owe borrowers a duty to place them in a loan they
can afford.

Countrywide’s knowledge of Plaintiff’s financial

information and its provision of good faith estimates to Loan
Network do not constitute evidence that Countrywide had actual
knowledge of Loan Network’s alleged Chapter 480 violations and
fraud.

As to Fidelity Escrow, the only remaining UDAP claim

against it is based upon the failure to provide the Loan
Documents to Plaintiff in a timely manner.

Plaintiff has not

presented any evidence that Countrywide had actual knowledge of
Fidelity Escrow’s failure to do so.

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“[T]he actual knowledge

standard requires more than a vague suspicion of wrongdoing.”
Countrywide “must have known more than that ‘something fishy was
going on.’”

See Stanton, 2010 WL 4176375, at *17 (quoting Casey,

127 Cal. App. 4th at 1149).

Plaintiff has failed to raise a

genuine issue of material fact as to Countrywide’s actual
knowledge of Loan Network’s and Fidelity Escrow’s alleged
wrongful conduct.

Plaintiff does not have a triable aiding and

abetting claim under Restatement (Second) of Torts § 876(b).

BOA

is entitled to summary judgment on Count XII to the extent that
the count relies on a theory that Countrywide knowingly provided
assistance to Loan Network and/or Fidelity in their alleged
commission of Chapter 480 violations or fraud.
Restatement (Second) of Torts § 876(c), however, does
not require actual knowledge.

Stanton, 2010 WL 4176375, at *17.

Viewing the evidence in the light most favorable to Plaintiff,
Countrywide failed to properly complete the forms notifying
Plaintiff of her right to cancel the loan transactions, as
required under TILA and Regulation Z.

Countrywide also failed to

disclose the fact that the first loan included negative
amortization.

Assuming, as Plaintiff has represented, that she

would have exercised her right to rescind if she had received
properly completed notices and that she would not have entered
into the loan in the first place if she had been aware of the
unfavorable terms, Countrywide’s conduct constitutes a breach of

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duty to Plaintiff that is separate from the alleged wrongful
actions by Loan Network and Fidelity Escrow that Countrywide
allegedly aided and abetted.

See id. (citing Gonzales v. Lloyds

TSB Bank, PLC, 532 F. Supp. 2d 1200, 1206 (C.D. Cal. 2006);
Restatement (Second) Torts § 876; Casey, 127 Cal. App. 4th at
1144).
This Court next turns to whether Countrywide’s alleged
actions gave “substantial assistance” to Loan Network and/or
Fidelity Escrow in accomplishing their alleged tortious results.
See Restatement (Second) of Torts § 876(c).

As noted in the

10/19/10 Summary Judgment Order:
Restatement (Second) Torts § 876, comment on
Clause (c) states:
When one personally participates in causing a
particular result in accordance with an
agreement with another, he is responsible for
the result of the united effort if his act,
considered by itself, constitutes a breach of
duty and is a substantial factor in causing
the result, irrespective of his knowledge
that his act or the act of the other is
tortious.
Restatement (Second) Torts § 876, comment on
Clause (c). In discussing substantial assistance
in the context of the first test for aiding and
abetting, the comments to § 876 clarify that
If the encouragement or assistance is a
substantial factor in causing the resulting
tort, the one giving it is himself a
tortfeasor and is responsible for the
consequences of the other’s act. This is
true both when the act done is an intended
trespass . . . and when it is merely a
negligent act. . . . The rule applies
whether or not the other knows his act is
tortious.
Restatement (Second) Torts § 876, comment on
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Clause (b).
Stanton, 2010 WL 4176375, at *17-18 (alterations in Stanton).
Viewing the facts in the light most favorable to
Plaintiff, Countrywide’s failure to properly complete the notice
of right to cancel forms and its failure to disclose the negative
amortization in the first loan could be construed as providing
“substantial assistance” to Loan Network’s and Fidelity Escrow’s
allegedly wrongful acts, notwithstanding Plaintiff’s failure to
insist that she be given time to read the documents at closing.
See id. at *18 (denying summary judgment to Fidelity Escrow on
the aiding and abetting claim).

This Court therefore CONCLUDES

that BOA has not established that it is entitled to summary
judgment on Count XII to the extent that the count relies on a
theory that Countrywide breached its duties to Plaintiff and that
this breach provided substantial assistance to Loan Network
and/or Fidelity in their alleged commission of Chapter 480
violations or fraud.
The BOA Motion is GRANTED as to Count XII to the extent
that it relies on a theory that Countrywide knowingly provided
assistance to Loan Network and/or Fidelity in their alleged
commission of Chapter 480 violations or fraud.

The BOA Motion is

DENIED to the extent that Count XII relies on a theory that
Countrywide breached its duties to Plaintiff and that this breach
provided substantial assistance to Loan Network and/or Fidelity

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in their alleged commission of Chapter 480 violations or fraud.
II.

Fidelity Escrow’s Motion
After the 10/19/10 Summary Judgment Order, the

remaining claims against Fidelity Escrow are Plaintiff’s breach
of fiduciary duty claim (Count XIV) and Plaintiff’s UDAP claim
(Count VIII) as to the alleged failure to provide the Loan
Documents, and Plaintiff’s aiding and abetting claim (Count XII).
All of these claims are premised upon Judge Ezra’s conclusion
that “Fidelity Escrow owed a duty to Plaintiff to provide her the
Loan documents at closing pursuant to the Lender’s Closing
Instructions.”

Stanton, 2010 WL 4176375, at *6.

The Fidelity

Escrow Motion essentially asks this Court to revisit Judge Ezra’s
ruling based on material facts that Fidelity Escrow contends have
come to light since the 10/19/10 Summary Judgment Order.

See

supra pgs. 21-22 (citing Mem. in Supp. of Fidelity Escrow Motion
at 3-4).

This Court disagrees.
Plaintiff has stated, in both her declaration and in

her deposition testimony, that she signed the Loan Documents on
February 1, 2007 at Fidelity Escrow’s office and that Dot Yoza
presented the documents to her for her signature.

[Stanton BOA

Decl. at ¶¶ 18-19; Pltf.’s Fidelity Escrow CSOF, Decl. of Colin
A. Yost, Exh. A (Trans. Excerpts of 2/9/11 Depo. of Plaintiff) at

59

2-6.13]

Although Fidelity Escrow has presented evidence to the

contrary, Plaintiff’s testimony is enough to create a genuine
issue of fact as to where the signing took place and who provided
the documents to Plaintiff for her signature.

These issues are

relevant to the questions whether Fidelity Escrow was both the
signing agent and the settlement agent and what Fidelity Escrow’s
obligations to Plaintiff were based on the closing instructions.
As noted previously, this Court cannot on summary judgment weigh
the evidence and determine these issues based on credibility.
This Court also finds that there is a genuine issue of fact as to
what Fidelity Escrow’s obligations were based on the two versions
of the closing instructions.
In spite of the progress of this litigation since the
10/19/10 Summary Judgment Order, there are still genuine issues
of material fact that preclude summary judgment in this case.
The Fidelity Escrow Motion is therefore DENIED.
CONCLUSION
On the basis of the foregoing, BOA’s Motion for Summary
Judgment, filed June 15, 2011, is HEREBY GRANTED IN PART AND
DENIED IN PART.

Specifically, the BOA Motion is:

•DENIED as to Counts I through IV (TILA claims);
•DENIED as to the portion of Count VI (UDAP) based on the alleged
failure to disclose the negative amortization in the first

13

These page numbers refer to the page numbers of the
exhibit because the pages numbers of the transcript itself are
obscured.
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loan, and GRANTED as to all other allegations in Count VI;
•GRANTED as to Count IX (fraud);
•GRANTED as to Count XI (civil conspiracy); and
•DENIED as to the portion of Count XII that relies on a theory
that Countrywide breached its duties to Plaintiff and that
this breach provided substantial assistance to Loan Network
and/or Fidelity in their alleged commission of Chapter 480
violations or fraud, and GRANTED in all other portions of
Count XII.
Fidelity Escrow’s Renewed Motion for Summary Judgment on Counts
8, 12, & 14 of Plaintiff’s First Amended Complaint, filed
June 15, 2011, is HEREBY DENIED in its entirety.
IT IS SO ORDERED.
DATED AT HONOLULU, HAWAII, November 30, 2011.

/S/ Leslie E. Kobayashi
Leslie E. Kobayashi
United States District Judge

CAROLYN ROSEMARY ESPINA STANTON V. BANK OF AMERICA, ET AL; CIVIL
NO. 09-00404 LEK-BMK; ORDER GRANTING IN PART AND DENYING IN PART
BANK OF AMERICA, N.A.’S MOTION FOR SUMMARY JUDGMENT AND DENYING
FIDELITY ESCROW NATIONAL TITLE & ESCROW OF HAWAII, INC.’S RENEWED
MOTION FOR SUMMARY JUDGMENT ON COUNTS 8, 12, & 14 OF PLAINTIFF’S
FIR5ST AMENDED COMPLAINT

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