Tamayose et al v. Option One Mortgage Corporation et al

Filing 120

ORDER (1) GRANTING DEFENDANT RESIDENTIAL CREDIT SOLUTIONS, INC.S MOTION FOR SUMMARY JUDGMENT, DOC. NO. 71; (2) GRANTING DEFENDANT OPTION ONE MORTGAGE CORPORATIONS, NOW KNOWN AS SAND CANYON CORPORATION, MOTION FOR SUMMARY JUDGMENT, DOC. NO. 76; (3) GR ANTING THIRD-PARTY DEFENDANT OLD REPUBLIC TITLE & ESCROW OF HAWAII, LTD.S MOTION FOR SUMMARY JUDGMENT, DOC. NO. 78; AND (4) GRANTING DEFENDANT H&R BLOCK BANKS MOTION FOR SUMMARY JUDGMENT, DOC. NO. 80 re 71 re 76 re 78 re 80 . Signed by JUDGE J. MICHAEL SEABRIGHT on 1/5/12. (gls, )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

REID I. TAMAYOSE and NADINE
K. TAMAYOSE,

)
)
)
Plaintiffs,
)
)
vs.
)
)
OPTION ONE MORTGAGE
)
CORPORATION, its successors and )
assigns; H&R BLOCK BANK;
)
RESIDENTIAL CREDIT
)
SOLUTIONS, INC.; and DOES 1-30, )
)
Defendants.
)
_______________________________ )
RESIDENTIAL CREDIT
)
SOLUTIONS, INC.,
)
)
Third-party Plaintiff,
)
)
vs.
)
)
OLD REPUBLIC TITLE AND
)
ESCROW OF HAWAII, INC.,
)
)
Third-party Defendant. )
_______________________________ )

CIVIL NO. 10-00185 JMS/BMK
ORDER (1) GRANTING DEFENDANT
RESIDENTIAL CREDIT SOLUTIONS,
INC.’S MOTION FOR SUMMARY
JUDGMENT, DOC. NO. 71;
(2) GRANTING DEFENDANT
OPTION ONE MORTGAGE
CORPORATION’S, NOW KNOWN AS
SAND CANYON CORPORATION,
MOTION FOR SUMMARY
JUDGMENT, DOC. NO. 76;
(3) GRANTING THIRD-PARTY
DEFENDANT OLD REPUBLIC TITLE
& ESCROW OF HAWAII, LTD.’S
MOTION FOR SUMMARY
JUDGMENT, DOC. NO. 78; AND
(4) GRANTING DEFENDANT
H&R BLOCK BANK’S MOTION FOR
SUMMARY JUDGMENT, DOC. NO.
80

ORDER (1) GRANTING DEFENDANT RESIDENTIAL CREDIT
SOLUTIONS, INC.’S MOTION FOR SUMMARY JUDGMENT, DOC. NO.
71; (2) GRANTING DEFENDANT OPTION ONE MORTGAGE
CORPORATION’S, NOW KNOWN AS SAND CANYON CORPORATION,
MOTION FOR SUMMARY JUDGMENT, DOC. NO. 76; (3) GRANTING
THIRD-PARTY DEFENDANT OLD REPUBLIC TITLE & ESCROW OF

HAWAII, LTD.’S MOTION FOR SUMMARY JUDGMENT, DOC. NO. 78;
AND (4) GRANTING DEFENDANT H&R BLOCK BANK’S MOTION FOR
SUMMARY JUDGMENT, DOC. NO. 80
I. INTRODUCTION
This action arises from a November 2006 loan transaction in which
Plaintiffs Reid and Nadine Tamayose (collectively, “Plaintiffs”) borrowed
$1,025,000 from Defendant Option One Mortgage Corporation (“Option One”),1 to
refinance their mortgages on real property located at 6789 B Kuamoo Road,
Kapaa, Hawaii 96746 (the “subject property”), and to use the remaining loan
proceeds to purchase a mini mart on Oahu. The resulting note and mortgage were
subsequently transferred to Defendant H&R Block Bank (“Block Bank”), and then
to Defendant Residential Credit Solutions, Inc. (“RCS”). While Block Bank still
held the note and mortgage, Plaintiffs’ mini mart failed and they got behind on
their mortgage payments, which resulted in Block Bank instituting non-judicial
foreclosure proceedings in December 2008. In response, Plaintiffs asserted to
cancel the loan transaction pursuant to the Truth in Lending Act (“TILA”), 15
U.S.C. § 1601 et seq.
Plaintiffs subsequently filed this action in the First Circuit Court of

1

Option One is now known as Sand Canyon Corporation. For ease of reference, the
court refers to this entity as “Option One” throughout this Order.
2

the State of Hawaii, asserting claims against Defendants pursuant to TILA seeking
damages and rescission. The action was subsequently removed to this court, and
RCS brought a third-party complaint seeking indemnity and contribution against
Old Republic Title (“ORT”), which handled the escrow for the mortgage
transaction.
Currently before the court is Defendants’ and Third-Party Defendant’s
Motions for Summary Judgment, in which they argue, among other things, that
Plaintiffs are not entitled to rescission pursuant to TILA because they cannot tender
the loan proceeds. Based on the following, the court agrees that there is no
genuine issue of material fact that Plaintiffs are unable to tender the loan proceeds
and GRANTS Defendants’ and Third-Party Defendant’s Motions for Summary
Judgment.
II. BACKGROUND
A.

Factual Background
In the fall of 2006, Plaintiffs decided to purchase Helen’s Party Store

in Honolulu and operate it as Tsuni’s Mini Mart. Reid Tamayose explained that
Plaintiffs were looking for a new “venture” that would take them off of Kauai:
Like every Kauai person, you get island fever and you
get bored of what you’re doing there, because it’s so
mundane. It’s a beautiful place to live, but there’s not
much opportunity, and I guess I was bored in what I was
3

doing and I guess because we had equity or something in
the house, we were looking for another venture, and
because my daughter was going to be coming to school
here, we thought, hey, it might be a great time to jump in.
...
Doc. No. 106-2, RCS Ex. V at 134-35. Reid Tamayose was familiar with the store
from when he used to live in Honolulu, and “basically, we just spur of the moment
said, Hey, we’re tired of here, let’s try something else . . . .” Id. at 135. To that
end, on September 12, 2006, Nadine Tamayose signed a Deposit Receipt Offer and
Acceptance to purchase Helen’s Party Store for $175,000, Doc. No. 78-15, ORT
Ex. J, and on November 13, 2006, Plaintiffs signed the Bill of Sale. Doc. No. 7816, ORT Ex. K.
Plaintiffs obtained the funds to purchase Helen’s Party Store by
refinancing their mortgages on the subject property with Option One. Nadine
Tamayose asserts that they entered into this loan transaction both to obtain the
funds for Tsuni’s Mini Mart as well as to obtain a better overall interest rate on
their mortgage. See Doc. No. 101, Nadine Tamayose Decl. ¶ 3. Further, the
Uniform Residential Loan Application, filled out by Option One, states that the
purpose of this loan is to “refinance.” See Doc. No. 101-1, Pls.’ Ex. A; see also
Doc. No. 101, N. Tamayose Decl. ¶ 7 (stating that “Option One considered the
purpose of the loan was a ‘refinance’”).
4

On November 24, 2006, Reid Tamayose executed a promissory note
(the “Note”) in the principal amount of $1.025 million in favor of Option One,
which was secured by a mortgage (the “Mortgage”) executed by Plaintiffs and
recorded in the Bureau of Conveyances. Doc. No. 98, Block Bank Concise
Statement of Facts (“CSF”) ¶¶ 2-3.2 From the $1.025 million, Plaintiffs (1) paid
off two mortgages totaling $775,085.59; (2) sent $171,610.51 to First Hawaii Title
to fund the purchase of Helen’s Party Store; and (3) received $59,968.44 in cash,
which also went to their new business. Doc. No. 98, Block Bank CSF ¶¶ 4-5; see
also N. Tamayose Decl. ¶ 5.
The closing of the loan was handled through ORT’s King Street
branch office on Oahu. Doc. No. 79, ORT CSF ¶ 6. In entering into this loan
transaction, Plaintiffs signed that they received the Good Faith Estimate, the
Mortgage, the Federal Truth-in-Lending Disclosure Statement, and two copies of
the Notice of Right to Cancel. Doc. No. 98, Block Bank CSF ¶ 6; see also Doc.
No. 74, RCS CSF ¶ 6; Doc. No. 71-17, RCS Ex. M. During their depositions,
Plaintiffs admitted that they signed the forms indicating that they received two
copies of the Notice of the Right to Cancel, Doc. No. 77-18, Option One Ex. 14 at

2

Where the parties do not dispute a particular fact, the court cites directly to the
particular Defendant’s CSF.
5

72-74, Doc. No. 77-21, Option One Ex. 15 at 59-60, yet Reid Tamayose could not
recall whether they actually received two copies. Doc. No. 77-18, Option One Ex.
14 at 74. Further, Nadine Tamayose now asserts that they received only one copy
of the Notice of Right to Cancel during the loan closing. Doc. No. 101, N.
Tamayose Decl. ¶ 21. In contrast, Dodie Haumea, a supervisor in the Quality
Assurance Department for ORT, explained that it is ORT’s custom and practice to,
among other things, require the borrowers to sign four sets of the Notice of Right
to Cancel such that two originals are given to the borrowers and ORT retains the
other originals for the lender. Doc. No. 78-4, Haumea Decl. ¶ 18.
Nadine Tamayose asserts that at the time of closing, they were still
living in the subject property and they maintained the subject property as their
principal and primary residence by keeping all utilities in their name, paying the
real estate taxes, and keeping all of their belongings there. Doc. No. 101, N.
Tamayose Decl. ¶¶ 10-12; see also Doc. No. 101-1, Pls.’ Ex. A (Uniform
Residential Loan Application stating that the subject property will be Plaintiffs’
primary residence). With that said, however, Plaintiffs ultimately lived in
Honolulu for two years while they operated Tsuni’s Mini Mart. Doc. No. 78-18,
ORT Ex. M at 129.
The Note and Mortgage were subsequently assigned to Block Bank
6

and on October 24, 2007, an Assignment of Mortgage and Note was recorded in
the Bureau of Conveyances.3 Doc. No. 80-16, Block Bank Ex. 13. Sometime in
2008, Plaintiffs defaulted on the loan (Tsuni’s Mini Mart had failed), resulting in
Block Bank issuing a Notice of Mortgagee’s Foreclosure Under Power of Sale
setting a public auction for December 5, 2008. See Doc. No. 1-2, Compl. Ex. D;
see also Doc. No. 71-11, RCS Ex. G at N. Tamayose Depo. 106-09. On December
4, 2008, Plaintiffs, through their counsel, notified Block Bank and Option One that
Plaintiffs were exercising their right to cancel the loan, based on various alleged
TILA violations that had occurred. See Doc. No. 101-3, Pls.’ Ex. C.
On June 16, 2009, Block Bank assigned the Mortgage and Note to
RCS. See Doc. No. 81-17, Block Bank Ex. 14.
As to whether Plaintiffs could have returned to Block Bank the loan
proceeds less any interest, finance charges, and other deductions either now or on
December 4, 2008 when they demanded rescission, Plaintiffs testified that they
could have possibly raised the funds from family and friends. For example, Reid
Tamayose testified that although he did not ask his friends or family for a loan and
he could not otherwise say how much they would loan him, he was “sure” that his

3

Plaintiffs dispute that the Note and Mortgage were transferred, yet fail to present any
evidence suggesting otherwise.
7

family would loan him the funds:
Q: . . . Basically, you had a $1,025,000 loan. You’re
going to take off the settlement charges which in the
HUD which we looked at, Exhibit 1, was about
$18,335.46. That would bring the balance down to about
1,006,664.40 less approximately the interest. So on
December 4, 2008, could you pay back to the lender
about one million dollars?
A. Possibility.
Q. How?
A. Family and friends.
Q. What family? What friends?
A. Well, I already mentioned my family, so I don’t need
to mention that again.
Q. So you’re talking about your mother and your two
aunts?
A. They would be able to help if I needed it.
...
Q. Anyone else?
A. No.
Q. And did you ask them to help you on December 4th,
2008?
A. No, I did not.
...
Q. How much could your mother give on December 4,
2008?
...
A. I don’t know.
Q. You don’t know, but you’re saying that you could
pay back at least a million dollars, so -A. I’m sure she could help me.
Q. How much could she give you?
A. I don’t know.
Q. How much could your aunts give you?
A. I don’t know.
...
Q. So other than your mother and your two aunts, how
8

were you going to get the money?
A. There are more members of my family, if needed, but
-Q. Well, I’m asking you for the specifics of how you’re
going to pay back a million dollars.
A. Well, with those three people, that’s enough right
there.
Q. They’re going to give you a million dollars?
A. They could, if they needed to, between the three of
them.
Doc. No. 81-19, Block Bank Ex. 15 at 80-82.
Nadine Tamayose similarly testified that they could “maybe” have
borrowed money from her mother-in-law:
Q. . . . Could you have paid back [the loan proceeds] to
the lender on December 4, 2008?
A. There’s a possibility.
Q. How?
A. Maybe.
Q. How.
A. Maybe my mother-in-law.
...
Q. Did you ask your mother-in-law to give you one
million dollars?
A. No. We haven’t asked yet. No, we haven’t asked.
Doc. No. 81-20, Block Bank Ex. 16 at 76-78.
Beyond seeking funds from friends, Plaintiffs conceded that they
themselves could not make a lump-sum payment of the loan proceeds either on
December 4, 2008 or now. Id. at 78. Indeed, Nadine Tamayose admitted that
although they stopped making mortgage payments, they did not save even the
9

money that would have been paid toward the mortgage for rescission:
Q. . . . So basically, if you were making a $6,000 a
month mortgage payments, and let’s just say that you
haven’t paid since this letter marked as Exhibit 8 was
sent, which was December 4th, 2008 -- so that would
mean from January of 2009, no mortgage payments were
being made until today. So that’s approximately 30
months of not making mortgage payments; is that
correct?
A. I think so. I don’t know.
Q. So 30 months times $6,000, that’s $180,000.
A. Okay.
...
Q. Do you have $180,000 today?
A. No, not today.
Id. at 112-13.
Nadine Tamayose nonetheless asserts that they might be able to pay
the loan proceeds through refinancing, borrowing from friends, or even selling the
subject property:
14. . . . [W]e have a close-knit extended family on Kauai
as well as many close friends who we believe would help
us refinance, but to do so we would need to show family
and friends and local mortgage brokers and lenders that
we have the right to refinance at a reduced TILA balance.
15. At our depositions, we were constantly asked if we
could pay the entire balance upfront, apparently designed
to make it look as if we could not benefit from a TILA
principal reduction, which without financing obviously
few borrowers could.
16. And were we unable to secure refinancing assistance,
we could sell our residence, which obviously we would
prefer not to do, but those are choices that as a practical
10

matter we cannot make until we receive a TILA
rescission principal reduction and know what that amount
will be and have something official to show lenders,
family and friends.
Doc. No. 101, N. Tamayose Decl. ¶¶ 14-16.
B.

Procedural Background
On November 23, 2009, Plaintiffs filed this action in the First Circuit

Court, State of Hawaii, alleging claims for declaratory and injunctive relief under
TILA. Specifically, Count One (entitled “Declaratory Judgment”) asserts:
Tamayoses seek a declaratory judgment that said 2006
loan has been cancelled as a matter of federal law and
that said nonjudicial foreclosures were and are wrongful,
and preventing Option One, H&R, and/or RCS from
scheduling any further nonjudicial foreclosure actions
and pursuing any transfer of title to either of them or to a
third party by exercising a “power of sale” clause in their
adhesive 2006 Mortgage . . . and [] an award of actual
and/or statutory damages, including attorneys’ fees and
costs[.]
Compl. ¶ 12. Count Two of the Complaint seeks injunctive relief to prevent
further foreclosure proceedings, and Count Three seeks punitive damages. Id. at 45. On March 30, 2010, Option One removed the action to this court.
On November 10, 2010, the court granted Option One’s Motion for
Partial Summary Judgment as to any claim against it regarding or seeking
cancellation or rescission. As a result, only Plaintiffs’ claims for damages remain
11

against Option One.
Defendants and Third-Party Defendant filed their various Motions for
Summary Judgment on September 9 and 14, 2011, and Plaintiffs filed an
Opposition on November 18, 2011. Replies were filed on November 28, 2011. A
hearing was held on December 5, 2011. Plaintiffs submitted a supplemental filing
on December 16, 2011, and Defendants submitted a supplemental filing on
December 23, 2011.
III. STANDARD OF REVIEW
Summary judgment is proper where there is no genuine issue of
material fact and the moving party is entitled to judgment as a matter of law. Fed.
R. Civ. P. 56(a). Rule 56(a) mandates summary judgment “against a party who
fails to make a showing sufficient to establish the existence of an element essential
to the party’s case, and on which that party will bear the burden of proof at trial.”
Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); see also Broussard v. Univ. of
Cal. at Berkeley, 192 F.3d 1252, 1258 (9th Cir. 1999).
“A party seeking summary judgment bears the initial burden of
informing the court of the basis for its motion and of identifying those portions of
the pleadings and discovery responses that demonstrate the absence of a genuine
issue of material fact.” Soremekun v. Thrifty Payless, Inc., 509 F.3d 978, 984 (9th
12

Cir. 2007) (citing Celotex, 477 U.S. at 323); see also Jespersen v. Harrah’s
Operating Co., 392 F.3d 1076, 1079 (9th Cir. 2004). “When the moving party has
carried its burden under Rule 56[(a)] its opponent must do more than simply show
that there is some metaphysical doubt as to the material facts [and] come forward
with specific facts showing that there is a genuine issue for trial.” Matsushita
Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 586-87 (1986) (citation and internal
quotation signals omitted); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
247-48 (1986) (stating that a party cannot “rest upon the mere allegations or
denials of his pleading” in opposing summary judgment).
“An issue is ‘genuine’ only if there is a sufficient evidentiary basis on
which a reasonable fact finder could find for the nonmoving party, and a dispute is
‘material’ only if it could affect the outcome of the suit under the governing law.”
In re Barboza, 545 F.3d 702, 707 (9th Cir. 2008) (citing Anderson, 477 U.S. at
248). When considering the evidence on a motion for summary judgment, the
court must draw all reasonable inferences on behalf of the nonmoving party.
Matsushita Elec. Indus. Co., 475 U.S. at 587; see also Posey v. Lake Pend Oreille
Sch. Dist. No. 84, 546 F.3d 1121, 1126 (9th Cir. 2008) (stating that “the evidence
of [the nonmovant] is to be believed, and all justifiable inferences are to be drawn
in his favor” (citations omitted)).
13

IV. DISCUSSION
In their Motions for Summary Judgment, Defendants and Third-Party
Defendant raise a panoply of arguments for why Plaintiffs’ TILA claim fails.
These arguments were made for good reason -- their discovery suggests that:
(1) TILA does not apply because Reid Tamayose testified that they took out the
mortgage loan to finance Tsuni’s Mini Mart and not for personal purposes, see
Doc. No. 106-2, RCS Ex. V at 134-35; (2) TILA does not apply because Plaintiffs
testified that they had moved to Honolulu to run their new business such that the
subject property was no longer Plaintiffs’ primary residence, see Doc. No. 78-18,
ORT Ex. M at 129; and (3) even if TILA applies to the mortgage transaction, no
TILA violation occurred given that Plaintiffs could not identify the TILA
violations in their depositions and otherwise could not state for certain whether
they received two notices of the right to cancel. Doc. No. 77-18, Option One Ex.
14 at 74.
Despite being unable to answer during their depositions even the most
basic questions regarding why they brought this action and the basis of their
claims, Nadine Tamayose had an apparent sudden memory recall after receiving
Defendants’ Motions because she now asserts in her Declaration that (1) the
subject property was always their primary residence; (2) Plaintiffs took out the
14

mortgage loans to obtain a better mortgage rate; and (3) Defendants violated TILA
by failing to provide two copies of the Notice of Right to Cancel. Beyond Nadine
Tamayose’s Declaration, Plaintiffs do not provide any specific evidence supporting
these naked allegations -- Plaintiffs present no evidence establishing when they
moved to Honolulu and/or whether they even visited the subject property after the
mortgage loan transaction, or how Plaintiffs concluded that the mortgage
transaction provided them a better mortgage loan rate given that their first
mortgage on its face appears to have less desirable loan terms.
Given the timing of Nadine Tamayose’s revelations, the court has
serious concerns as to their veracity. Plaintiffs’ counsel, who has numerous TILA
actions in this District, has represented other clients who have had similar memory
recalls in opposition to motions for summary judgment. Nonetheless, the court
ultimately need not address these arguments raised by Defendants and Third-Party
Defendant because summary judgment may be granted on other grounds. The
court addresses Plaintiffs’ claims in turn.
///
///
///
///
15

A.

Count I (TILA)
Plaintiffs assert a TILA claim for rescission and a TILA damages

claim based on Defendants’ failure to honor Plaintiffs’ TILA request.4
As to Plaintiffs’ TILA rescission claim, Defendants argue that this
claim fails because there is no genuine issue of material fact that Plaintiffs can
tender the loan proceeds. This court has already found once that it may condition
TILA rescission on a plaintiff’s tender of the loan proceeds. See Beazie v.
Amerifund Fin., Inc., 2011 WL 2457725, at *7 (D. Haw. June 16, 2011). Beazie
came to this conclusion based on Yamamoto v. Bank of New York, 329 F.3d 1167,
1173 (9th Cir. 2003), which expressly recognizes that the trial court has discretion
to reorder the steps laid out in TILA’s rescission provision, 15 U.S.C.
§ 1635(b)5 to require the borrower to establish an ability to tender before rescission

4

At the December 5, 2011 hearing, Plaintiffs clarified that they were not seeking TILA
damages based on any TILA violations that allegedly occurred during consummation of the loan.
5

15 U.S.C. § 1635(b) provides:
Within 20 days after receipt of a notice of rescission, the creditor
shall return to the obligor any money or property given as earnest
money, downpayment, or otherwise, and shall take any action
necessary or appropriate to reflect the termination of any security
interest created under the transaction. . . . Upon the performance
of the creditor’s obligations under this section, the obligor shall
tender the property to the creditor, except that if return of the
property in kind would be impracticable or inequitable, the obligor
shall tender its reasonable value.
16

is ordered. Yamamoto explains:
As rescission under § 1635(b) is an on-going process
consisting of a number of steps, there is no reason why a
court that may alter the sequence of procedures after
deciding that rescission is warranted, may not do so
before deciding that rescission is warranted when it finds
that, assuming grounds for rescission exist, rescission
still could not be enforced because the borrower cannot
comply with the borrower’s rescission obligations no
matter what. Such a decision lies within the court’s
equitable discretion, taking into consideration all the
circumstances including the nature of the violations and
the borrower’s ability to repay the proceeds. If, as was
the case here, it is clear from the evidence that the
borrower lacks capacity to pay back what she has
received (less interest, finance charges, etc.), the court
does not lack discretion to do before trial what it could do
after.
Yamamoto, 329 F.3d at 1173.
Although Plaintiffs (represented by the same plaintiff’s counsel in
Beazie) disagree with Yamamoto, Plaintiffs provide no new arguments that
persuade the court that Yamamoto does not allow the court to condition TILA
rescission on a borrower’s ability to tender. Indeed, since Beazie, the Ninth Circuit
has confirmed that the court may condition TILA rescission on a borrower’s ability
to first tender the loan proceeds, and has even suggested that a borrower must
affirmatively plead an ability to tender. See Hogan v. NW Trust Servs., Inc., --Fed. Appx. ----, 2011 WL 2601563, at *1 (9th Cir. July 1, 2011) (“The district
17

court properly dismissed appellants’ TILA claim seeking rescission because
appellants did not allege the ability to tender the proceeds of the loan.”); see also
Pierro v. Spiegel Dev., Inc., 2011 WL 6176077, at *1 (9th Cir. Dec. 13, 2011)
(stating that on remand, “the district court may also consider under Yamamoto
whether to reorder the default rescission sequence, in which the creditor must
release its lien before the consumer must tender”).6 The court therefore reiterates
its holding in Beazie that the court has discretion to condition TILA rescission on a
borrower’s ability to tender the loan proceeds.
Based upon the evidence presented, the court exercises its discretion
in this case to find that rescission should be conditioned on Plaintiffs’ tender of the
loan proceeds. As Beazie reasoned, “[r]equiring Plaintiff[s] to prove an ability to
tender ensures that rescission is more than a hollow remedy and that the parties
will be placed in the positions they held before consummation of the loan
transaction.” Beazie, 2011 WL 2457725, at *7. Further, Plaintiffs do not suggest
any reason why the particular circumstances of this action support that Plaintiffs
should not be required to tender the loan proceeds before the mortgage is released.
See Riopta v. Amresco Residential Mortg. Corp., 101 F. Supp. 2d 1326, 1334-35

6

Although these cases are not published, they issued after January 1, 2007 and may be
cited pursuant to Ninth Circuit Rule 36.1(b) and Federal Rule of Appellate Procedure 32.1(a).
18

(D. Haw. 1999) (rejecting argument that the TILA violations were so egregious to
change the court’s discretion in requiring plaintiffs to tender the loan proceeds
before mortgagee released security interest in the property).
As to whether there is a genuine issue of material fact that Plaintiffs
are able to tender the loan proceeds, Defendants have carried their burden of
coming forward with evidence establishing that Plaintiffs could not tender the loan
proceeds on their own, either now or on December 4, 2008 when they first
demanded rescission. See Doc. No. 81-21, Block Bank Ex. 16 at 88, 112-13.
Indeed, Nadine Tamayose admitted that they do not have in their possession the
approximate $1 million dollars of loan proceeds, much less a smaller amount to
tender. See Doc. No. 81-21, Block Bank Ex. 16 at 88, 112-13.
Because Defendants have carried their burden of demonstrating the
absence of a genuine issue of material fact that Plaintiffs cannot tender the loan
proceeds, Plaintiffs “must do more than simply show that there is some
metaphysical doubt as to the material facts [and] come forward with specific facts
showing that there is a genuine issue for trial.” Matsushita Elec. Indus. Co., 475
U.S. at 586-87 (citation and internal quotation signals omitted). Plaintiffs have
failed to carry their burden, instead relying on only the most conclusory and
speculative assertions regarding what they might be able to gather through friends,
19

refinancing, and/or selling the subject property. But “[c]onclusory, speculative
testimony in affidavits and moving papers is insufficient to raise genuine issues of
fact and defeat summary judgment.” Soremekun, 509 F.3d at 984 (citing Nelson v.
Pima Cmty. Coll., 83 F.3d 1075, 1081-82 (9th Cir. 1996) (“[M]ere allegation and
speculation do not create a factual dispute for purposes of summary judgment.”));
see also Cypert v. Indep. Sch. Dist. No. I-050 of Osage Cnty,, 661 F.3d 477, 481
(10th Cir. 2011) (“Unsubstantiated allegations carry no probative weight in
summary judgment proceedings. To defeat a motion for summary judgment,
evidence, including testimony, must be based on more than mere speculation,
conjecture, or surmise.” (quotations omitted)).
For example, Plaintiffs assert that friends and family might be able to
provide the loan proceeds if asked -- Reid Tamayose testified that his mother and
two aunts “could, if they needed to, between the three of them,” provide him the
loan proceeds, Doc. No. 81-19, Block Bank Ex. 15 at 80-82, and Nadine Tamayose
testified that “[m]aybe my mother-in-law” might be able to provide them the funds.
Doc. No. 81-20, Block Bank Ex. 16 at 76-78; see also Doc. No. 101, N. Tamayose
Decl. ¶ 14 (Nadine Tamayose asserting that “we have a close-knit extended family
on Kauai as well as many close friends who we believe would help us refinance”).
But Plaintiffs did not come forward with any specific evidence establishing how
20

much funds their friends or family are willing to loan them -- indeed, Plaintiffs
admit that they have not even asked any family or friends whether they can borrow
any funds. Doc. No. 81-19, Block Bank Ex. 15 at 80-82, Doc. No. 81-20, Block
Bank Ex. 16 at 76-78. Plaintiffs also assert that they might be able to secure
refinancing assistance, see Doc. No. 101, N. Tamayose Decl. ¶¶ 14-15, yet they
present no evidence of any proposed refinancing transactions that would assist
them in tendering the loan proceeds. And although Plaintiffs assert that they
would not be able to obtain proposed mortgage loan information until they are
granted rescission, this assertion (like all of Plaintiffs’ assertions regarding ability
to tender) is wholly unsubstantiated by any evidence -- Plaintiffs fail to offer any
evidence suggesting this is the case. Finally, Plaintiffs assert that as a last resort
they could sell the subject property, but Plaintiffs fail to present any evidence
establishing the fair market value of the subject property compared to the tender
amount to show that selling the subject property might allow them to tender the
loan proceeds.
In sum, Plaintiffs have presented no evidence establishing (1) how
much funds Plaintiffs themselves could tender; (2) how much funds each of their
relatives and friends is actually willing to loan Plaintiffs; (3) how much funds
Plaintiffs could obtain through a bank (whether through refinancing or some other
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arrangement); or (4) how much funds Plaintiffs could raise through selling the
subject property. Plaintiffs’ speculation regarding what they might be able to
gather through friends, refinancing, and selling the subject property is simply
insufficient to create a genuine issue of material fact that they are able to tender the
loan proceeds. See Slowjewski v. Polam Fed. Credit Union, 2010 WL 4973757, at
*11 (N.D. Cal. Dec. 1, 2010) (granting summary judgment on TILA rescission
claim where the plaintiff failed to present any evidence of an approval or preapproval by a bank, failed to present evidence of the current value of the property,
and failed to provide declarations of friends and families stating the amounts of
money they were willing to loan plaintiff); see also Yamamoto, 329 F.3d at 1173
(affirming summary judgment where plaintiffs were unable to show ability to
tender the loan proceeds); ING Bank v. Korn, 2011 WL 5326146, at *4 (W.D.
Wash. Nov. 4, 2011) (granting summary judgment where borrowers admitted that
“they do not have the capacity to pay back what they have received”); Cavaco v.
Mortg. Elec. Registration Sys., Inc., 2011 WL 1565979, at *5 (D. Haw. Apr. 25,
2011) (granting summary judgment where the plaintiff “presents no evidence that
she has the ability to tender an appropriate amount back to the lender”); cf. Bolton
v. Bank of Am., N.A., 2011 WL 1842834, at *3 (E.D. Wash. May 16, 2011)
(denying summary judgment where the plaintiffs presented evidence that the
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property was valued at $725,000, which exceeded the loan amount of $580,000).
The court therefore GRANTS the Motions for Summary Judgment on Plaintiffs’
TILA rescission claim.
As to Plaintiffs’ TILA damages claim, Plaintiffs conceded at the
December 5, 2011 hearing that if they are not entitled to rescission, then their
TILA damages claim also fails. The court therefore GRANTS the Motions for
Summary Judgment on Plaintiffs’ TILA damages claim as well.
B.

Counts II and III (Injunctive Relief and Punitive Damages)
Defendants argue that summary judgment should be granted on

Plaintiffs’ claims for injunctive relief and punitive damages because they are
derivative of Plaintiffs’ TILA claim. Indeed, these Counts appear to seek relief
based solely on Plaintiffs’ TILA claim and fail to assert independent claims for
relief. Further, Plaintiffs offer no argument suggesting otherwise. Thus, because
Plaintiffs’ TILA claim fails, these claims fail as well and the court GRANTS
Defendants’ Motion for Summary Judgment on Counts II and III.
V. CONCLUSION
For the foregoing reasons, the court (1) GRANTS RCS’s Motion for
Summary Judgment, Doc. No. 71; (2) GRANTS Option One’s Motion for
Summary Judgment, Doc. No. 76; (3) GRANTS Third-Party Defendant ORT’s
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Motion for Summary Judgment, Doc. No. 78; and (4) GRANTS Block Bank’s
Motion for Summary Judgment, Doc. No. 80. The Clerk of Court is directed to
close the case file.
IT IS SO ORDERED.
DATED: Honolulu, Hawaii, January 5, 2012.

/s/ J. Michael Seabright
_____________________________
J. Michael Seabright
United States District Judge

Tamayose, et al. v. Option One Mortg. Corp., et al., Civ. No. 10-00185 JMS/BMK, Order
(1) Granting Defendant Residential Credit Solutions, Inc.’s Motion for Summary Judgment, Doc.
No. 71; (2) Granting Defendant Option One Mortgage Corporation’s, Now Known as Sand
Canyon Corporation, Motion for Summary Judgment, Doc. No. 76; (3) Granting Third-Party
Defendant Old Republic Title & Escrow of Hawaii, Ltd.’s Motion for Summary Judgment, Doc.
No. 78; and (4) Granting Defendant H&R Block Bank’s Motion for Summary Judgment, Doc.
No. 80

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