Krakauer et al v. Indymac Mortgage Services et al

Filing 142

ORDER DENYING PLAINTIFFS' MOTION TO DISMISS DEFENDANTS/COUNTERCLAIMANTS' SUMMARY JUDGMENT PURSUANT TO FRCP RULE 12(B)(1) re: 127 . Signed by JUDGE ALAN C KAY on 2/26/2013. (afc)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
)
)
)
)
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Plaintiffs,
)
)
vs.
)
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INDYMAC MORTGAGE SERVICES, A
DIVISION OF ONEWEST BANK, FSB, A)
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FEDERAL SAVINGS BANK; ONEWEST
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BANK, FSB; DOES 1-20,
)
)
Defendants.
________________________________)
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INDYMAC MORTGAGE SERVICES, A
DIVISION OF ONEWEST BANK, FSB, A)
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FEDERAL SAVINGS BANK; ONEWEST
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BANK, FSB,
)
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Counterclaimants,
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vs.
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DEAN KRAKAUER and ROBBIN
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KRAKAUER,
)
)
Counterclaim
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Defendants.
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DEAN KRAKAUER and ROBBIN
KRAKAUER,

Civ. No. 09-00518 ACK-BMK

ORDER DENYING PLAINTIFFS’ MOTION TO DISMISS
DEFENDANTS/COUNTERCLAIMANTS’ SUMMARY JUDGMENT PURSUANT TO FRCP
RULE 12(b)(1)
PROCEDURAL BACKGROUND
On October 27, 2009, Dean Krakauer and Robbin Krakauer
(collectively, “Plaintiffs”) filed a complaint (“Complaint”) in
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this Court against Indymac Mortgage Services and OneWest Bank,
FSB (“OneWest”).

ECF No. 1.

On December 28, 2009, Defendants

filed an answer to the Complaint as well as a counterclaim
(“Counterclaim”) against the Plaintiffs.

ECF No. 5.

Plaintiffs filed a First Amended Complaint on July 30,
2010.

ECF No. 43.

On August 23, 2010, Defendants filed a motion

for summary judgment as to both the First Amended Complaint and
the Counterclaim (“2010 MSJ”).

ECF No. 46.

Defendants also

filed a Concise Statement of Facts for the 2010 MSJ (“2010 MSJ
CSF”).

ECF No. 47.

Plaintiffs filed an Opposition to the 2010

MSJ on September 28, 2010, but Plaintiffs did not file a concise
statement of facts.

ECF No. 53.

Defendants filed a Response in

Support of the 2010 MSJ on November 30, 2010.

ECF No. 56.

This

Court held a hearing on the 2010 MSJ on December 13, 2010 and
subsequently issued its “Order Granting Defendants/
Counterclaimants’ Motion for Summary Judgment” on December 14,
2010 (“2010 MSJ Order”).

ECF No. 57 and 59.

On January 6, 2011,

the Court issued its “Order Granting Decree of Foreclosure and
Appointing Commissioner.”

ECF No. 64.

On June 22, 2012, the

Court issued its “Order Requiring Another Foreclosure Sale”
because Defendants failed to follow the requirements in the
January 6, 2011 order.

ECF No. 120.

On November 9, 2012, Plaintiffs filed a “Motion for
Dismiss Counterclaimants[‘] [2010 MSJ Order] Pursuant to FRCP

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Rule 12(b)(1) for Lack of Standing to Foreclose” (“Motion to
Dismiss”).

ECF No. 127.

Defendants Filed a Memorandum in

Opposition to Plaintiffs’ Motion to Dismiss on December 19, 2012.
ECF No. 130.
130-132.

Plaintiffs did not file a reply.1/

See ECF No.

The Court determined that this matter could be decided

without a hearing under Local Rule 7.2(d).

ECF No. 135.

FACTUAL BACKGROUND
In August 2002, Plaintiffs bought a vacant lot located
at 71-1620 Puulani Place, Kailua-Kona, Hawai’i, 96740
(“Property”).

2010 MSJ CSF Ex. G at 4, Ex. M.2/

On March 31,

2006, in order to build a home on the Property, Plaintiffs
executed and delivered a promissory note (“Note”) in favor of
IndyMac Bank, FSB (“IndyMac”).
at 7.

2010 MSJ CSF Ex. A, Ex. F, Ex. G

To secure payment on the Note, Plaintiffs executed a

mortgage encumbering the Property in favor of IndyMac

1/

Instead of filing a reply for the Motion to Dismiss,
Plaintiffs filed a “Motion for Summary Judgment Pursuant to LR
56.1(g) for Admission of Material Facts Base[d] on Newly
Discovered Evidence for Wrongful Foreclosure and Strike
Defe[]ndant, (Counterclaimant), OneWest Bank, FSB’s Memorandum in
Opposition.” ECF No. 132. The Court has chosen to address this
motion in a separate order.
2/

For the purposes of this order, this Court uses
Defendants’ 2010 MSJ CSF to establish the facts of this case.
See D. Haw. Local Rule 56.1(g)(“[T]he moving party’s concise
statement will be deemed admitted unless controverted by a
separate concise statement of the opposing party.”). As this
Court noted in the 2010 MSJ Order, all of the material facts in
the 2010 MSJ CSF are deemed admitted because Plaintiffs did not
timely file a separate concise statement of facts. See 2010 MSJ
Order at 2 n.1.
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(“Mortgage”).

2010 MSJ CSF Ex. B.

The Mortgage was recorded on

April 7, 2006, in the State of Hawai’i Bureau of Conveyances
(“Bureau”) as Document No. 2006-065052.

2010 MSJ CSF Ex. B.

IndyMac was closed by the United States Office of
Thrift Supervision on July 11, 2008, and the Federal Deposit
Insurance Corporation (“FDIC”) was named Conservator of IndyMac.
2010 MSJ Order at 4 n.5, ECF No. 59; Nicholson v. OneWest Bank,
Civ. No. 1:10-CV-0795-JEC/AJB, 2010 WL 2732325, at *4 n.2 (N.D.
Ga. Apr. 20, 2010); FDIC Failed Bank Information,
http://www.fdic.gov/bank/individual/failed/IndyMac.html (last
visited on Feb. 20, 2013).

On March 19, 2009, the FDIC completed

the sale of IndyMac to OneWest, and almost all of IndyMac’s
deposits were transferred to OneWest.

Id.

At some point in time subsequent to IndyMac’s closure,
the FDIC as Receiver for IndyMac assigned Plaintiffs’ Mortgage to
OneWest (“OneWest Assignment”).3/
Mtn. to Dismiss Ex. A.

2010 MSJ CSF Ex. C, Plntfs.’

The OneWest Assignment was recorded at

the Bureau on July 6, 2010.

Id.

Erica Johnson-Seck signed the

OneWest Assignment as attorney-in-fact for the FDIC as Receiver
for IndyMac.

Id.

After April 2009, Plaintiffs failed to make their
scheduled payments under the Note and Mortgage.

3/

2010 MSJ CSF Ex.

As this Court noted in its 2010 MSJ Order, the exact time
when IndyMac assigned its interest in the Mortgage to OneWest is
unclear. 2010 MSJ Order at 4 n.5, ECF No. 59.
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D, Ex. G at 12-13.

Consequently, on September 10, 2009, OneWest

recorded a “Notice of Mortgagee’s Intention to Foreclose Under
Power of Sale” at the Bureau.

2010 MSJ CSF Ex. E.

Plaintiffs

filed a First Amended Complaint to prevent OneWest’s non-judicial
foreclosure sale, and OneWest filed a counterclaim to establish
OneWest’s right to foreclose the Mortgage and sell the Property.
ECF No. 1, ECF No. 5 at 6-8.

OneWest filed a Motion for Summary

Judgment for both Plaintiffs’ First Amended Complaint and
OneWest’s Counterclaim, which this Court granted in December of
2010.

ECF No. 59.

The Court subsequently issued an order

granting decree of foreclosure and appointing a commissioner to
sell the Property on June 22, 2012.4/

ECF No. 120.

After three

years of litigation and on the eve of confirmation of the sale of
the Property, Plaintiffs now bring this motion alleging that this
Court lacks subject matter jurisdiction over the case.
STANDARD OF REVIEW
Federal Rule of Civil Procedure 12(b)(1) authorizes the
Court to dismiss an action for “lack of subject-matter
jurisdiction.”

For this FRCP 12(b)(1) motion, Defendants have

the burden of establishing standing to foreclose on the Property.

4/

The Court originally issued an order granting decree of
foreclosure and appointing a commissioner in January of 2011, but
the subsequent sale did not conform to the terms of the order.
ECF No. 64, ECF No. 113. As a result, the Court did not approve
the first sale and issued another order for a second sale of the
Property. ECF No. 113 and 120.
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See Robinson v. U.S., 586 F.3d 683, 685 (9th Cir. 2009) (“[T]he
party asserting subject matter jurisdiction has the burden of
proving its existence.”).

A FRCP 12(b)(1) motion may (1) attack

the allegations of a pleading as insufficient to confer subject
matter jurisdiction on the court (“facial attack”) or (2) “attack
the existence of subject matter jurisdiction in fact” (“factual
attack”).

Malama Makua v. Rumsfeld, 136 F. Supp. 2d 1155, 1159

(D. Haw. 2001); White, 227 F.3d at 1242.
In this case, Plaintiffs present a factual attack on
subject matter jurisdiction.

Deutsche Bank Trust Co. v. Beesley,

Civ. No. 12-00067 SOM/KSC, 2012 WL 5383555 at *3 (D. Haw. 2012)
(party’s argument that bank lacked standing to foreclose
constituted a factual attack on the court’s subject matter
jurisdiction).

For a factual attack, a court may accept and

evaluate evidence to determine whether jurisdiction exists.
McCarthy v. United States, 850 F.2d 558, 560 (9th Cir. 1988).
A. Special Considerations for Pro Se Litigants
Pro se pleadings and briefs are to be construed
liberally.

Balisteri v. Pacifica Police Dep’t., 901 F.2d 696

(9th Cir. 1990).

The court should act with leniency toward pro

se litigants when they technically violate a rule.

Motoyama v.

Haw. Dep’t of Transp., 864 F. Supp. 2d 965, 975 (D. Haw. 2012);
Draper v. Coombs, 792 F.2d 915, 924 (9th Cir. 1986).

However,

pro se litigants are “not excused from knowing the most basic

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pleading requirements.”

Am. Ass’n of Naturopathic Physicians v.

Hayhurst, 227 F.3d 1104, 1107 (9th Cir. 2000).

Pro se litigants

must follow the same rules of procedure that govern other
litigants.

Motoyama, 864 F. Supp. 2d at 975.
DISCUSSION

I.

Whether this Court has Subject Matter Jurisdiction
Under Article III of the Constitution of the United

States, parties must have standing for this Court to have
jurisdiction.
Cir. 2011).

Chapman v. Pier 1 Imports, 631 F.3d 939, 946 (9th

A party must show that the “conduct of which he

complains has caused him to suffer an injury in fact that a
favorable judgment will redress.”

Elk Grove Unified School Dist.

v. Newdow, 542 U.S. 1, 12, 124 S. Ct. 2301, 2308 (2004).
Plaintiffs allege that OneWest does not own the
Mortgage and Note because the OneWest Assignment is invalid;
therefore, OneWest lacks standing to foreclose on the Property.
Plntfs.’ Mtn. to Dismiss at 2.

Plaintiffs claim that Erica

Johnson-Seck, who signed on behalf of the FDIC as receiver for
IndyMac, had no authority to sign the OneWest Assignment because
she has no “official power of Attorney from the FDIC.”

Id.

Contrary to Plaintiffs’ assertions, Defendant OneWest
sufficiently established its standing to foreclose on the
Property in the December 2010 MSJ.

2010 MSJ Order at 24-29.

Under Hawai’i law, a party who shows “a direct chain of paper
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title that he is the owner of the land demonstrates prima facie
evidence of their contents and that title is vested in that
[party].”

Beesley, 2012 WL 5383555 at *3 (citing Apana v.

Kapano, 20 Haw. 399, 403 (1911) (internal quotation marks
omitted).
As noted in the 2010 MSJ Order, Defendant OneWest
produced a direct chain of paper title.
27, 31-34.

See 2010 MSJ Order at

The original Mortgage recorded with the Bureau on

April 7, 2006, states that the initial lender is IndyMac.
MSJ CSF at Ex. B, ECF No. 47.

2010

Defendants recorded the OneWest

Assignment transferring the Mortgage from IndyMac to OneWest on
July 6, 2010.

2010 MSJ CSF Ex. C, ECF No. 47.

This Court in the

2010 MSJ Order also took judicial notice that the OneWest
Assignment was recorded in the Bureau’s online database of
official public records.

2010 MSJ Order at 27.

Under these

facts, Defendant OneWest provided sufficient evidence
establishing standing to pursue its rights under the Mortgage.
Additionally, Plaintiffs lack standing to challenge the
validity of the assignment from FDIC as receiver for IndyMac to
OneWest because Plaintiffs are not a party to the OneWest
Assignment.

See Beesley, 2012 WL 5383555 at *4.

Under Hawaii

law, third parties like the Plaintiffs generally “do not have
enforceable contract rights.”

Velasco v. Sec. Nat’l Mortgage

Co., 823 F. Supp. 2d 1061, 1067 (D. Haw. 2011) (quoting Ass’n of

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Apartment Owners of Newtown Meadows v. Venture 15, Inc., 115
Hawai’i 232, 270 (2007)).

A lack of authority to enter a

contract, which is Plaintiffs’ argument regarding the OneWest
Assignment, makes a contract voidable, not void.
WL 5383555 at *5.

Beesley, 2012

While a void contract has no legal effect and

cannot be enforced against any party; a voidable contract remains
effective until one of the parties who created the contract
chooses to avoid it.

Id.

For a voidable contract, only the

parties who made the contract can seek avoidance of the contract.
Id.

Accordingly, the Court will not set aside the OneWest

Assignment at the request of Plaintiffs, who are merely third
parties, not creators, of the assignment.
Furthermore, the Court rejects Plaintiffs’ unsupported
assertion that Ms. Johnson-Seck was not an attorney-in-fact for
the FDIC as Receiver for Indymac Bank.
Dismiss at 2.

See Plntfs.’ Mtn. to

Plaintiffs’ own Exhibit A, which is a copy of the

OneWest Assignment, shows that the notary statement on page 2
references a power of attorney dated May 21, 2009, appointing Ms.
Johnson-Seck as an attorney-in-fact for the FDIC (“2009 POA”).
The notary statement further states that the 2009 POA is recorded
at the Bureau as Document No. 3895089.
Dismiss Ex. A at 2.

See Plntfs.’ Mtn. to

The Court takes judicial notice of the fact

that the 2009 POA is listed in the Bureau’s online database of

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official public records.5/

State of Hawaii Department of Land

and Natural Resources Bureau of Conveyances - Official Public
Records, https://boc.ehawaii.gov/docsearch/documentDetails.html?
documentNumber=T3895089&caller=PAGE_DOCUMENT_NUMBER_SEARCH (last
visited Feb. 20, 2013).

Accordingly, the Court concludes that

OneWest Bank has standing to foreclose because the evidence
before the Court shows that the OneWest Assignment is valid.
CONCLUSION
For the foregoing reasons, the Court DENIES Plaintiffs’
Motion to Dismiss Counterclaimants’ Summary Judgment Pursuant to
FRCP Rule 12(b)(1).
IT IS SO ORDERED.
DATED:

Honolulu, Hawai#i, February 26, 2013.

________________________________
Alan C. Kay
Sr. United States District Judge

Krakauer et al. v. Indymac Mortgage Services et al., Civ. No. 09-00518 ACKBMK: ORDER DENYING PLAINTIFFS’ MOTION TO DISMISS DEFENDANTS/COUNTERCLAIMANTS’
SUMMARY JUDGMENT PURSUANT TO FRCP RULE 12(b)(1).

5/

Fed. R. Evid. 201 provides that courts may sua sponte
take judicial notice of facts that are “capable of accurate and
ready determination by resort to sources whose accuracy cannot
reasonably be questioned.”
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