Valencia et al v. Carrington Mortgage Services, LLC. et al
Filing
214
ORDER (1) GRANTING IN PART AND DENYING IN PART DEFENDANTS EQUITY FINANCIAL GROUP OF HONOLULU, LLC, EQUITY FINANCIAL, LLC AND BRAD B. KANESHIRO'S OBJECTIONS TO THE MAGISTRATE JUDGE'S FINDINGS AND RECOMMENDATION 211 , (2) DENYING PLAINTIFF S' OBJECTIONS TO FINDINGS AND RECOMMENDATION 212 , (3) DENYING DEFENDANTS CARRINGTON MORTGAGE SERVICES, LLC, AND DEUTSCHE BANK NATIONAL TRUST COMPANY'S CROSS-OBJECTIONS TO PLAINTIFFS' OBJECTIONS TO FINDINGS AND RECOMMENDATION 213 , AND (4) ADOPTING THE FINDINGS AND RECOMMENDATION AS MODIFIED 207 . Signed by JUDGE LESLIE E. KOBAYASHI on 6/24/2013. (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
WANDA VALENCIA and MARK
VALENCIA,
)
)
)
)
plaintiffs,
)
vs.
)
)
CARRINGTON MORTGAGE SERVICES, )
)
LLC; DEUTSCHE BANK NATIONAL
TRUST COMPANY, AS TRUSTEE,
)
)
FOR CARRINGTON HOME EQUITY
)
LOAN TRUST, SERIES 2005-NC4
)
ASSET BACKED PASS THROUGH
)
CERTIFICATES; EQUITY
FINANCIAL GROUP OF HONOLULU, )
)
LLC; EQUITY FINANCIAL LLC;
)
BRAD B. KANESHIRO,
)
)
DefendantS.
_____________________________ )
CIVIL 10-00558 LEK-RLP
ORDER (1) GRANTING IN PART AND DENYING IN PART DEFENDANTS EQUITY
FINANCIAL GROUP OF HONOLULU, LLC, EQUITY FINANCIAL, LLC AND BRAD
B. KANESHIRO’S OBJECTIONS TO THE MAGISTRATE JUDGE’S FINDINGS AND
RECOMMENDATION, (2) DENYING PLAINTIFFS’ OBJECTIONS TO FINDINGS
AND RECOMMENDATION, (3) DENYING DEFENDANTS CARRINGTON MORTGAGE
SERVICES, LLC, AND DEUTSCHE BANK NATIONAL TRUST COMPANY’S
CROSS-OBJECTIONS TO PLAINTIFFS’ OBJECTIONS TO FINDINGS AND
RECOMMENDATION, AND
(4) ADOPTING THE FINDINGS AND RECOMMENDATION AS MODIFIED
On May 9, 2013, the magistrate judge filed his Findings
and Recommendation to (1) Grant in Part and Deny in Part
Defendants Equity Financial Group of Honolulu, LLC, Equity
Financial, LLC and Brad B. Kaneshiro’s (“Equity Defendants”)
Motion for Attorneys’ Fees; and (2) Grant in Part and Deny in
Part Defendant Carrington Mortgage Services, LLC (“CMS”) and
Deutsche Bank National Trust Company’s (“DBNT”) (collectively,
“Bank Defendants”)1 Motion for Award of Attorneys’ Fees (“F&R”).
[Dkt. no. 207.]
On May 20, 2013, the Equity Defendants filed
objections to the F&R (“Equity Defendants’ Objections”).
no. 211.]
[Dkt.
On May 22, 2013, pro se Plaintiffs Wanda and Mark
Valencia (“Plaintiffs”) filed their objections to the F&R
(“Plaintiffs’ Objections”).
[Dkt. no. 212.]
On May 28, 2013,
the Bank Defendants filed their cross-objections to Plaintiffs’
Objections (“Cross-Objections”).
[Dkt. no. 213.]
The Court
finds these matters suitable for disposition without a hearing
pursuant to Rules LR7.2(d) and LR74.2 of the Local Rules of
Practice of the United States District Court for the District of
Hawai`i (“Local Rules”).
After careful consideration of the
parties’ submissions and the relevant legal authority, the Court
HEREBY GRANTS IN PART AND DENIES IN PART the Equity Defendant’s
Objections, DENIES Plaintiffs’ Objections, DENIES the Bank
Defendants’ Cross-Objections, and MODIFIES the magistrate judge’s
F&R for the reasons set forth below.
BACKGROUND
On January 29, 2013, this Court issued its Order
Granting (1) Defendants Carrington Mortgage Services, LLC and
Deutsche Bank National Trust Company’s Motion to Dismiss the
1
The Bank Defendants and Equity Defendants are referred to
collectively as “Defendants” throughout.
2
Fourth Amended Complaint Filed 9/14/12 as Against Movants; and
(2) Defendants Equity Financial Group of Honolulu, LLC, Equity
Financial, LLC, and Brad B. Kaneshiro’s Motion to Dismiss the
Fourth Amended Complaint Filed on September 14, 2012 (“1/29/13
Order”).
Valencia v. Carrington Mortg. Servs., LLC, 2013 WL
375643 (D. Hawai`i Jan. 29, 2013).
In the 1/29/13 Order, the
Court granted Defendants’ unopposed motions to dismiss the Fourth
Amended Complaint with prejudice, finding that Plaintiffs had
failed to cure the many defects in their complaint, despite
having numerous opportunities to do so.
Id.
The Court issued
judgment in favor of Defendants on January 30, 2013.
[Dkt. no.
169.]
I.
Motions For Attorneys’ Fees
A.
Equity Defendants’ Motion
On February 12, 2013, the Equity Defendants filed a
Motion for Attorneys’ Fees (“Equity Defendants’ Motion”).
no. 170.]
[Dkt.
The Equity Defendants requested the following fees,
pursuant to Haw. Rev. Stat. § 607-142:
2
Haw. Rev. Stat. § 607-14 provides in part:
In all the courts, in all actions in the nature of
assumpsit . . . there shall be taxed as attorneys’
fees, to be paid by the losing party and to be
included in the sum for which execution may issue,
a fee that the court determines to be reasonable
. . . . The court shall then tax attorneys’ fees,
which the court determines to be reasonable, to be
paid by the losing party; provided that this
(continued...)
3
Name
Hours
Rate
Total
Peter T. Kashiwa
2.6
$350.00
$910.00
Regan M. Iwao
8.4
$275.00
$2,310.00
Audrey M. Yap
168.9
$200.00
$33,780.00
Tax (4.71%)
$1,742.71
Total
$38,742.71
The magistrate judge found and recommended that only
Count I of the Fourth Amended Complaint (Breach of
Contract/Breach of Covenant of Good Faith and Fair Dealing) is a
claim in the nature of assumpsit, as required for an award of
fees pursuant to Haw. Rev. Stat. § 607-14.
[F&R at 7.]
The
magistrate judge further found and recommended that the nonassumpsit claims asserted against the Equity Defendants were not
inextricably linked to or derivative of the breach of contract
claim and therefore found that apportionment of the fees claimed
between assumpsit and non-assumpsit claims was practicable and
necessary.
The magistrate judge also found that the breach of
contract claim was not raised until the filing of the Third
Amended Complaint on May 30, 2012 and, therefore, no fees
incurred prior to that date were recoverable.
[Id. at 12.]
The
magistrate judge therefore determined that the fees award should
2
(...continued)
amount shall not exceed twenty-five percent of the
judgment . . . [or] the amount sued for if the
defendant obtains judgment.
4
be reduced by eighty percent to account for work completed on
claims for which the Equity Defendants are not entitled to
attorneys’ fees.
[Id.]
The magistrate judge found the hourly rates requested
for Audrey M. Yap, Esq. ($200), and Regan M. Iwao, Esq. ($275) to
be slightly excessive and therefore reduced them to $175 for
Ms. Yap, a fifth-year litigation associate, and $250 for
Mr. Iwao, a partner with twelve years of litigation experience.
[Id. at 24-25.]
Plaintiffs did not challenge the hours requested
by the Equity Defendants, and the magistrate judge found that the
time requested for work performed after May 30, 2012 was
reasonably and necessarily incurred.
[Id. at 26.]
The
magistrate judge found and recommended that the Equity Defendants
be awarded the following fees:
Name
Hours
Rate
Total
Audrey M. Yap
75.0
$175.00
$13,125.00
Regan M. Iwao
1.9
$250.00
$475.00
Subtotal
$13,600.00
Subtotal with 80% reduction for apportionment
$2,720.00
Tax (4.71%)
$128.11
Total
$2,848.11
[Id. at 26.]
B.
Bank Defendants’ Motion
On February 13, 2013, the Bank Defendants filed a
Motion for Award of Attorneys’ Fees (“Bank Defendants’ Motion”).
5
[Dkt. no. 173.]
The Bank Defendants requested the following
attorneys’ fees for work performed by their counsel:
Name
Hours
Rate
Total
Cheryl Nakamura
216.3
$250.00
$54,075.00
Jason M. Tani
47.6
$235.00
$11,186.00
Lisa Strandtman
237.7
$230.00
$54,671.003
Shimpei Oki
41.1
$140.00
$5,754.00
Total
$125,686.00
The Bank Defendants conceded in their motion for
attorneys’ fees that the Third Amended Complaint and the Fourth
Amended Complaint did not assert any claims in the nature of
assumpsit against them, but argued that they were nonetheless
entitled to fees pursuant to Haw. Rev. Stat. § 607-14 because the
relief requested by Plaintiffs transformed the entire action
against them into one in the nature of assumpsit or, in the
alternative, the assumpsit and non-assumpsit claims are
inextricably linked.
The magistrate judge found that the
requested relief did not transform the action into one in the
nature of assumpsit, as Plaintiffs’ primary allegations against
the Bank Defendants were that they violated statutory duties and
lacked authority to foreclose because they had no relationship to
3
It appears the Bank Defendants miscalculated the total
dollar amount of fees for the work of Lisa Strandtman. Based on
her hours worked and hourly rate, the Court calculates a fee of
$54,671.00. The Bank Defendants state the total as $54,686.50.
Their total fees requested is accordingly slightly higher than
the Court’s calculated fee.
6
the note and mortgage.
[Id. at 14-16.]
The magistrate judge found that the Bank Defendants
prevailed on one assumpsit claim (breach of contract/breach of
the covenant of good faith and fair dealing as to the servicer
participation agreement between CMS and the United States
government) asserted in the First and Second Amended Complaints
when, on July 31, 2012, this district court denied Plaintiffs’
motion for reconsideration of this district court’s order
granting summary judgment in favor of the Bank Defendants on that
claim.
[Dkt. no. 152.]
The magistrate judge determined that the
Bank Defendants were therefore entitled to the portion of their
fees incurred prior to July 31, 2012.
The magistrate judge
further found and recommended that apportionment was practicable
and necessary, and that the Bank Defendants could only recover
for that portion of attorneys’ fees incurred in defense of the
assumpsit claim.
[F&R at 17-19.]
The magistrate judge therefore
determined that the fees award should be reduced by ninety
percent to account for work completed on claims for which the
Bank Defendants are not entitled to attorneys’ fees.
[Id.]
The magistrate judge rejected the Bank Defendants’
argument that they are entitled to attorneys’ fees pursuant to
Haw. Rev. Stat. § 607-14 in accordance with the provisions in the
mortgage and note, which reference the lender’s ability to
recover attorneys’ fees, finding that the underlying action was
7
not based on the mortgage and note as contracts.
[Id. at 20.]
Plaintiffs did not challenge the hourly rates
requested, and the magistrate judge found and recommended that
they were manifestly reasonable.
[Id. at 27.]
Plaintiffs
generally argued that the fees requested were excessive, but the
magistrate judge found that all of the time requested for work
performed before July 31, 2012 was reasonably and necessarily
incurred.
[Id. at 27-28.]
The magistrate judge therefore found
and recommended that the Bank Defendants be awarded the following
fees:
Name
Hours
Rate
Total
Cheryl A. Nakamura
196.6
$250.00
$49,150.00
Jason M. Tani
47.6
$235.00
$11,186.00
Lisa Strandtman
185.6
$230.00
$42,688.00
Shimpei Oki
41.1
$140.00
$5,754.00
Subtotal
$108,778.00
Subtotal with 80% reduction for apportionment
$10,877.80
Tax (4.71%)
$512.34
Total
$11,390.14
[Id. at 28.]
The magistrate judge noted that the fee award pursuant
to Haw. Rev. Stat. § 607-14 is limited to twenty-five percent of
the judgment, based upon the amount sued for.
The magistrate
judge found that the recommended award of attorneys’ fees is well
below twenty-five percent of the original amount of Plaintiff’s
8
loan, $516,000.
II.
[Id. at 28.]
Objections
A.
Equity Defendants’ Objections
The Equity Defendants first object to the F&R insofar
as it denies them any attorneys’ fees incurred prior to the
filing of the Third Amended Complaint on May 30, 2012.
The
Equity Defendants argue that Plaintiffs asserted claims for
breach of contract/breach of the covenant of good faith and fair
dealing (assumpsit claims) against all Defendants in the Second
Amended Complaint.
As such, the Equity Defendants argue, the fee
award should not be limited to fees incurred after May 30, 2012.
[Equity Defendants’ Objections at 6-7.]
The Equity Defendants next object to the magistrate
judge’s apportionment of fees between assumpsit and non-assumpsit
claims, arguing that the essential character of the entire action
was in assumpsit and, as such, fees should be available as to all
claims.
[Id. at 7-9.]
The Equity Defendants further argue that,
if fees are to be apportioned, the eighty percent reduction
recommended by the magistrate judge is unreasonable: because two
of the seven causes of action asserted in the Fourth Amended
Complaint sound in assumpsit, the Equity Defendants argue, at
least twenty-nine percent of the fees should be awarded.
9-10.]
[Id. at
The Equity Defendants assert that at least five of the
seven causes of action sound in assumpsit and, as such, a
9
proportional apportionment of fees would result in an award of at
least seventy-one of their requested fees.
[Id. at 10-11.]
Finally, the Equity Defendants argue that their
requested hourly rates are reasonable and in line with current
hourly rates charged in the community.
B.
[Id. at 11-12.]
Plaintiffs’ Objections
Plaintiffs argue that the underlying action did not
involve any claims in the nature of assumpsit and, as such, the
Defendants are not entitled to fees pursuant to Haw. Rev. Stat. §
607-14.
Specifically, Plaintiffs argue that they were not trying
to enforce the terms of any contract but, rather, that the
underlying suit involved allegations of torts and violations of
federal statutes arising out of the alleged fraud committed by
the brokers by falsifying income and employment information, and
fraudulently assigning the note and mortgage.
Objections at 2-3.]
[Plaintiffs’
Plaintiffs argue that the Hawai`i Supreme
Court case of TSA International Ltd. v. Shimizu Corp. supports
their assertion that the suit did not involve enforcement of a
contract and, thus, did not sound in assumpsit.
[Id. at 3-4
(citing TSA Int’l Ltd. v. Shimizu Corp., 92 Hawai`i 243, 264, 990
P.2d 713, 734 (1999)).]
Plaintiffs further argue that the fees requested were
unreasonable and excessive.
[Id. at 4-5.]
10
C.
Bank Defendants’ Cross-Objections
The Bank Defendants first note that Plaintiffs’
Objections must fail, as they fail to specify which portions of
the magistrate judge’s findings and recommendations to which they
object, and fail to demonstrate that the magistrate judge’s
findings and recommendations were incorrect.
[Cross-Objections
at 4-6.]
The Bank Defendants object to the F&R, arguing that the
parties’ agreement in the mortgage is a separate basis for an
award, independent of Haw. Rev. Stat. § 607-14.
The Bank
Defendants note that they asserted three alternative grounds for
an award of attorneys’ fees: two pursuant to Haw. Rev. Stat.
§ 607-14, and one pursuant to the attorneys’ fee provision in the
mortgage.
[Id. at 6-7.]
The Bank Defendants argue that, by
failing to oppose the third argument, Plaintiffs “acknowledge
Bank Defendants’ contractual right to an award of fees.”
7.]
[Id. at
The Bank Defendants argue that the mortgage agreement
entitles them to attorneys’ fees regardless of whether the
underlying action was based on a contract, and that the F&R
failed to address this argument.
[Id. at 7-9.]
The Bank Defendants note that the mortgage states that
they may recover fees incurred in any “legal proceeding that
might significant affect Lender’s interest in the Property and/or
rights under this Security Instrument,” and argue that the
11
underlying case was just such a proceeding, as Plaintiffs sought
to enjoin foreclosure and strip the Bank Defendants of their
right to enforce the note and mortgage by having them rescinded
and expunged from the Bureau of Conveyances.
[Id. at 10 (quoting
Bank Defendants’ Concise Statement of Facts in Support of the
Motion for Summary Judgment on All Claims Against Movants, filed
12/21/11 (dkt. no. 84), Decl. of Jason M. Tani (“Tani Decl.”),
Exh. D (Mortgage), at 7-8).]
As such, the Bank Defendants argue
that they are entitled to fees based on the language of the
mortgage, and that the fee award need not be limited by the
requirements of Haw. Rev. Stat. § 607-14.
[Id. at 11-12.]
STANDARD
When a party objects to a magistrate judge’s findings
or recommendations, the district court must review de novo those
portions to which the objections are made and “may accept,
reject, or modify, in whole or in part, the findings or
recommendations made by the magistrate judge.”
28 U.S.C.
§ 636(b)(1); see also United States v. Raddatz, 447 U.S. 667, 673
(1980); United States v. Reyna–Tapia, 328 F.3d 1114, 1121 (9th
Cir. 2003) (en banc) (“[T]he district judge must review the
magistrate judge’s findings and recommendations de novo if
objection is made, but not otherwise.”).
Under a de novo standard, this Court reviews “the
matter anew, the same as if it had not been heard before, and as
12
if no decision previously had been rendered.”
Freeman v.
DirecTV, Inc., 457 F .3d 1001, 1004 (9th Cir. 2006); United
States v. Silverman, 861 F.2d 571, 576 (9th Cir. 1988).
The
district court need not hold a de novo hearing; however, it is
the court’s obligation to arrive at its own independent
conclusion about those portions of the magistrate judge’s
findings or recommendation to which a party objects.
United
States v. Remsing, 874 F.2d 614, 616 (9th Cir. 1989).
DISCUSSION
I.
Equity Defendants’ Objections
A.
Fees Incurred Prior to the Filing of the Third Amended
Complaint
The Equity Defendants argue that, contrary to the
magistrate judge’s F&R, they should be awarded fees incurred
prior to the filing of the Third Amended Complaint on May 30,
2012.
The Court agrees.
The magistrate judge found that Plaintiffs did not
assert their breach of contract claim (the claim sounding in
assumpsit) against the Equity Defendants until the filing of the
Third Amended Complaint.
[F&R at 12.]
The Court finds, however,
that Plaintiffs asserted that claim against all Defendants in the
Second Amended Complaint, filed on May 20, 2011.
[Dkt. no. 34.]
Specifically, Plaintiffs claimed in their Second Amended
Complaint that “Defendants Equity Financial and Kaneshiro
13
breached their contractual duties and their covenant of good
faith and fair dealing with Plaintiffs . . . .”
at 44-45.]
[Dkt. no. 34-9,
As such, the magistrate judge erred in limiting the
recoverable fees to those incurred for the defense of the
assumpsit claim after May 30, 2012.
As such, the Court FINDS that the Equity Defendants are
entitled to fees incurred for defending the assumpsit claim for
the period after May 20, 2011.
The Equity Defendants’ Objections
are therefore GRANTED insofar as they seek an award for fees
incurred prior to May 30, 2012, after the filing of the Second
Amended Complaint on May 20, 2011.
B.
Assumpsit and Non-Assumpsit Claims
The Equity Defendants further argue that, contrary to
the magistrate judge’s findings, all of Plaintiffs’ claims
against them are in the nature of assumpsit.
[Equity Defendants’
Objections at 1-9.]
Plaintiffs asserted five counts against the Equity
Defendants in the Fourth Amended Complaint: (1) Breach of
Contract/Breach of Covenant of Good Faith and Fair
Dealing/Constructive Fraud (Count I); (2) Violation of the
Federal Racketeer Influenced and Corrupt Organizations (“RICO”)
Act (Count III); (3) Violation of the State RICO Act (Count IV);
(4) Breach of Fiduciary Duty (Count VI); and (5) Negligence
(Count VII).
[Dkt. no. 158 (Fourth Amended Complaint) at 21-37.]
14
Count I is clearly in the nature of assumpsit.
Plaintiffs allege that the Equity Defendants “entered into a
verbal agreement” with Plaintiffs, agreeing to “act as
[Plaintiffs’] loan broker and find for [Plaintiffs] a suitable
mortgage lender and a mortgage loan on prevailing market terms
that would be affordable to [Plaintiffs,]” and that the Equity
Defendants breached this “oral contract,” and that “Plaintiffs
were harmed because they could not sustain the predatory loan
terms they were provided.”
[Id. ¶¶ 16, 67.]
It is settled law
in Hawai`i that “assumpsit is a common law form of action which
allows for the recovery of damages for non-performance of a
contract, either express or implied, written or verbal, as well
as quasi contractual obligations.”
TSA Int’l, 92 Hawai`i at 264,
990 P.2d at 734 (emphasis in TSA Int’l) (quoting Schulz v.
Honsador, 67 Haw. 433, 435, 690 P.2d 279, 281 (1984) (internal
quotation marks omitted)); see also 808 Dev., LLC v. Murakami,
111 Hawai`i 349, 366, 141 P.3d 996, 1013 (2006).
As such, Count
I is clearly an assumpsit claim.
The Equity Defendants argue that Plaintiffs’ claims for
breach of fiduciary duty, constructive fraud, and negligence are
likewise in the nature of assumpsit.
The Court notes, however,
that “[t]he mere fact that [Plaintiffs’] claims related to a
contract between the parties does not render a dispute between
15
the parties an assumpsit action.”
264, 990 P.2d at 734.
See TSA Int’l, 92 Hawai`i at
Rather, it appears from the Fourth Amended
Complaint that these claims sound in tort.
As this Court noted
in its 1/29/13 Order, the basis of these claims is the allegation
that the Equity Defendants acted as Plaintiffs’ mortgage brokers
and thus owed Plaintiffs a fiduciary duty, and that they breached
that duty by failing to disclose material facts regarding the
loan and by falsifying information on Plaintiffs’ loan
application.
Valencia, 2013 WL 375643, at *8-9.
Plaintiffs’
claims for breach of fiduciary duty, constructive fraud, and
negligence therefore do not stem from a contractual relationship
between the parties but, rather, stem from the alleged fiduciary
relationship.
As such, these are not in the nature of assumpsit.
See Kona Enters., Inc. v. Estate of Bishop, 229 F.3d 877, 886
(9th Cir. 2000) (stating that “a breach of fiduciary duty claim
sounds in tort where the duties allegedly breached arise as a
matter of law from the fiduciary relationship between partners
and not from a contractual agreement” (citing TSA Int’l, 92
Hawai`i at 264, 990 P.2d at 734)).
Similarly, Plaintiffs’
remaining claims against the Equity Defendants for violations of
the federal and state RICO Acts are statutory and therefore also
not in the nature of assumpsit.
In sum, the Court FINDS that only one claim in the
Fourth Amended Complaint against the Equity Defendants (Count I)
16
is in the nature of assumpsit.
The Court therefore DENIES the
Equity Defendants’ Objections as to this issue.
C.
Apportionment and the Eighty Percent Reduction
The Equity Defendants argue that, even if some of the
claims are non-assumpsit claims, apportionment is impracticable,
as all of the claims are inextricably intertwined.
Defendants’ Objections at 1-9.]
[Equity
As to the issue of
apportionment, the Hawai`i Supreme Court has made clear that, “in
awarding attorneys’ fees in a case involving both assumpsit and
non-assumpsit claims, a court must base its award of fees, if
practicable, on an apportionment of the fees claimed between
assumpsit and non-assumpsit claims.”
264, 990 P.2d at 734.
TSA Int’l, 92 Hawai`i at
Where the assumpsit and non-assumpsit
claims are so inextricably linked that apportionment is
impracticable or impossible, however, courts may award reasonable
attorneys’ fees pursuant to Haw. Rev. Stat. § 607-14 without any
apportionment.
Blair v. Ing, 96 Hawai`i 327, 333, 31 P.3d 184,
190 (2001).
Here, the Court finds that the assumpsit and nonassumpsit claims are not so inextricably linked as to render
apportionment impracticable or impossible.
As discussed above,
Plaintiffs’ non-assumpsit claims do not derive from the alleged
breach of the oral contract; rather, these are separate tort
claims premised on an alleged fiduciary duty that the Equity
17
Defendants owed to Plaintiffs.
The factual underpinnings of the
assumpsit and non-assumpsit claims are therefore not so
intertwined as to make apportionment virtually impossible.
See,
e.g., Au v. Funding Grp., Inc., Civ. No. 11-00541 SOM-KSC, 2013
WL 1154211, at *5 (D. Hawai`i Feb. 19, 2013) (finding
apportionment impossible where the non-assumpsit claims were
derived from the breach of contract claim).
The Court therefore
FINDS that apportionment is both practicable and necessary.
The Court FINDS that apportionment of eighty percent is
appropriate to account for work related to the non-assumpsit
claims.
The assumpsit claim accounts for one of five claims
asserted against the Equity Defendants.
Indeed, as the
magistrate judge pointed out, only two paragraphs of the Equity
Defendants’ motion to dismiss the Third Amended Complaint and
only two pages of the Equity Defendants’ motion to dismiss the
Fourth Amended Complaint were dedicated to this claim.
124-1 at 7-8; dkt. no. 164-1 at 8-10.]
[Dkt. no.
The Court is persuaded,
after reviewing the billing records provided by the Equity
Defendants and the allegations asserted as to each claim, that a
reduction of the fee award by eighty percent is appropriate.4
See, e.g., Pascual v. Aurora Loan Servs., LLC, Civil No. 10–00759
4
This is especially true in light of the lack of
specificity with which the pro se Plaintiffs drafted each of the
successive amended complaints, and the relative similarities
between the successive complaints. See Valencia, 2013 WL 375643,
at *7-9.
18
JMS–KSC, 2012 WL 5881858 (D. Hawai`i Nov. 21, 2012) (adopting the
magistrate judge’s finding and recommendation reducing fees
awarded by ninety percent to account for work on non-assumpsit
claims).
D.
Reasonableness of Hourly Rates
The magistrate judge found that the hourly rates
requested for Audrey M. Yap, Esq. and Regan M. Iwao, Esq. were
slightly excessive.
The Equity Defendants requested an hourly
rate of $200 for Ms. Yap, a fifth year litigation associate, and
$275 for Mr. Iwao, a partner with twelve years of litigation
experience.
[Equity Defendants’ Motion for Attorneys’ Fees,
Decl. of Audrey M. Yap at ¶¶ 8.B, 8.C.]
The magistrate judge
therefore reduced the requested hourly rates and concluded that
the following hourly rates were reasonable: Ms. Yap – $175;
Mr. Iwao – $250.5
The Equity Defendants argue that the hourly
rates requested were reasonable and that the reduction was
unjustified.
The Court disagrees.
In assessing whether an hourly rate is reasonable, a
court “should be guided by the rate prevailing in the community
for similar work performed by attorneys of comparable skill,
5
The magistrate judge did not include an analysis of the
reasonableness of the fees requested for the work of Peter T.
Kashiwa, Esq., as Mr. Kashiwa appears to have done no work after
the filing on the Third Amended Complaint. As this Court has
found that the Equity Defendants are entitled to fees incurred as
of the filing of the Second Amended Complaint on May 20, 2011,
the Court also addresses fees for Mr. Kashiwa.
19
experience, and reputation.”
Webb v. Ada Cnty., 285 F.3d 829,
840 (9th Cir. 2002) (citing Chalmers v. City of Los Angeles, 796
F.2d 1205, 1210–11 (9th Cir. 1986)); see also Gates v.
Deukmejian, 987 F.2d 1392, 1405 (9th Cir. 1992) (noting that the
rate awarded should reflect “the rates of attorneys practicing in
the forum district”).
In addition to their own statements, fee
applicants are required to submit additional evidence that the
rate charged is reasonable.
Jordan v. Multnomah Cnty., 815 F.2d
1258, 1263 (9th Cir. 1987).
Here, the Equity Defendants provided
an excerpt from the Pacific Business News’s Book of Lists that
reflects the range of hourly rates for lawyers in Hawai`i law
firms.
[Equity Defendants’ Motion for Attorneys’ Fees, Decl. of
Audrey M. Yap, Exh. B.]
This Court is familiar with the prevailing rates in the
community and the hourly rates awarded within this district in
other cases.
The Court agrees with the magistrate judge and
finds $250.00 to be reasonable hourly rate for Mr. Iwao, and
$175.00 to be a reasonable hourly rate for Ms. Yap.
In addition,
the Court finds that $350.00 is a reasonable hourly rate for
Mr. Kashiwa, a partner with over thirty years of experience and
particular expertise in the areas of real estate, business, and
commercial transactions.
See, e.g., Shea, et al. v. Kahuku
Housing Found., Inc., et al., Civil No. 09–00480 LEK–RLP, 2011 WL
1261150, at *6–7 (D. Hawai`i Mar. 31, 2011) (finding $350 was a
20
reasonable rate for an attorney with nearly forty years of
experience).
The Court therefore DENIES the Equity Defendants’
Objections insofar as they object to the magistrate judge’s
determination as to the reasonableness of the hourly rates
requested.
The Court therefore GRANTS IN PART AND DENIES IN PART
the Equity Defendants’ Objections to the F&R.
Based on the
Court’s inclusion of fees incurred prior to May 30, 2012, but
after the Second Amended Complaint was filed on May 20, 2011, and
including the reduction of eighty percent, Plaintiffs are awarded
the following attorneys’ fees:
Name
Hours
Rate
Total
Peter T. Kashiwa
2.6
$350.00
$910.00
Audrey M. Yap
75.0
$175.00
$13,125.00
Regan M. Iwao
1.9
$250.00
$475.00
Subtotal
$14,510.00
Subtotal with 80% reduction for apportionment
$2,902.00
Tax (4.71%)
$136.68
Total
$3,038.68
III. Plaintiffs’ Objections
Plaintiffs object to the F&R because, they argue, no
fees should be awarded, as none of their claims are in the nature
of assumpsit.
As discussed above, the Court FINDS that Count I
in the Fourth Amended Complaint asserts an assumpsit claim
against the Equity Defendants.
As such, and for the reasons
21
discussed above, the Court DENIES Plaintiffs’ Objections.
To the
extent Plaintiffs argue that the fees awarded were unreasonable
because “[n]one of the fees were incurred defending against the
enforcement of any contract, contract provisions, or contract
damages,” [Plaintiffs’ Objections at 4,] Plaintiffs’ Objections
are likewise DENIED for the reasons stated above.
III. Bank Defendants’ Cross-Objections
A.
Award of Fees Based on Agreement
The Bank Defendants argue that they are entitled to
attorneys’ fees pursuant to the parties’ agreement in the
mortgage, and that this is a separate and distinct ground for an
award of attorneys’ fees independent of Haw. Rev. Stat. § 607-14.
The Hawai`i Supreme Court has made clear that,
ordinarily, attorneys’ fees cannot be awarded as damages or costs
unless “so authorized by statute, rule of court, agreement,
stipulation, or precedent.”
Cnty. of Hawai`i v. C & J Coupe
Family Ltd. P’ship, 124 Hawai`i 281, 306, 242 P.3d 1136, 1161
(2010) (quoting Sierra Club v. Dep’t of Transp. of State of
Hawai‘i, 120 Hawai‘i 181, 218, 202 P.3d 1226, 1263 (2009)
(internal quotations omitted)).
As such, attorneys’ fees may be
awarded pursuant to an agreement between the parties, independent
of any statutory authorization of fees.
Importantly, however, if
the nature of the claim is “outside the terms of the provision
providing for attorneys’ fees, then the fee provision does not
22
apply, and attorneys’ fees are not authorized.”
Romero v.
Hariri, 80 Hawai`i 450, 459, 911 P.2d 85, 94 (Ct. App. 1996)
(citing Hawaiian Isles Enterp., Inc. v. City and Cnty. of
Honolulu, 76 Hawai`i 487, 489, 879 P.2d 1070, 1072 (1992)).
Here, the mortgage states:
If . . . there is a legal proceeding that might
significantly affect Lender’s interest in the
Property and/or rights under this Security
Instrument . . . Lender may do and pay for
whatever is reasonable or appropriate to protect
Lender’s interest in the Property and rights under
this Security Instrument, including . . . paying
reasonable attorneys’ fees to protect its interest
in the Property and/or rights under this Security
Instrument . . . .”
. . . .
Any amounts disbursed by Lender under this Section
9 shall become additional debt of Borrower secured
by this Security Instrument. These amounts shall
bear interest at the Note rate from the date of
the disbursement and shall be payable, with such
interest, upon notice from Lender or Borrower
requesting payment.
[Bank Defendants’ Concise Statement of Facts in Support of the
Motion for Summary Judgment on All Claims Against Movants, filed
12/21/11 (dkt. no. 84), Decl. of Jason M. Tani, Exh. D
(Mortgage), at 7-8.]
The Bank Defendants argue that, contrary to the
magistrate judge’s finding, the attorneys’ fee provision in the
mortgage provides a basis for an award of fees for all of
Plaintiffs’ claims.
The Court agrees that the attorneys’ fee provision in
23
the mortgage is broad enough to encompass all of Plaintiffs’
claims in this action.
The mortgage provides for attorneys’ fees
in any “legal proceeding that might significantly affect Lender’s
interest in the Property and/or rights under this Security
Instrument.”
[Id.]
Here, Plaintiffs claims, had they prevailed,
would have significantly affected the Bank Defendants’ interest
in the Property and/or rights under the mortgage.
In their
successive complaints, Plaintiffs sought to enjoin foreclosure
and strip the Bank Defendants of their right to enforce the note
and mortgage by having the note, mortgage, assignment of note and
mortgage, and all foreclosure notices rescinded and expunged from
the Bureau of Conveyances.6
Clearly, such remedies would
significantly affect the Bank Defendants’ interest in the
Property and rights under the mortgage.
See Hawaiian Isles, 76
Hawai`i at 490-91 879 P.2d at 1073-74 (awarding fees pursuant to
the parties’ contractual agreement because the lawsuit was
“clearly contemplated by” that agreement).
The Court notes, however, that the mortgage states that
any amounts disbursed in protecting the Bank Defendants’ rights
under the mortgage, including for attorneys’ fees, “shall become
additional debt of Borrower secured by this Security Instrument
6
Indeed, Plaintiffs themselves state in their objections to
the F&R that, with respect to the Bank Defendants, “[t]he case
from start to finish was about invalidating a fraudulent
assignment of the note and mortgage.” [Plaintiffs’ Objections at
3.]
24
. . . and shall be payable, with such interest, upon notice from
Lender or Borrower requesting payment.”
[Bank Defendants’
Concise Statement of Facts in Support of the Motion for Summary
Judgment on All Claims Against Movants, filed 12/21/11 (dkt. no.
84), Decl. of Jason M. Tani, Exh. D (Mortgage), at 7-8.]
As
such, the mortgage does not entitle the Bank Defendants to
recover attorneys’ fees as an award pursuant to the instant
litigation.
Rather, as provided in the mortgage, the Bank
Defendants may convert the amounts spent on attorneys’ fees into
additional debt secured by the mortgage.
As such, the Court finds that the attorneys’ fee
provision in the mortgage does not provide an independent basis
for an award of attorneys’ fees in the instant litigation.
The
Court therefore DENIES the Bank Defendants’ Cross-Objection and
ADOPTS the magistrate judge’s award of attorneys’ fees in the
amount of $11,390.14, pursuant to Haw. Rev. Stat. § 607-14.
CONCLUSION
On the basis of the foregoing, the Court HEREBY GRANTS
IN PART AND DENIES IN PART the Equity Defendants’ Objections to
the Magistrate Judge’s Findings and Recommendations, filed on May
20, 2013; (2) DENIES Plaintiffs’ Objection to Findings and
Recommendation; and (3) DENIES the Bank Defendants’ CrossObjections to Plaintiffs’ Objection to Findings and
Recommendation.
The Court HEREBY ADOPTS the Findings and
25
Recommendation as MODIFIED by this Order.
IT IS SO ORDERED.
DATED AT HONOLULU, HAWAII, June 24, 2013.
/S/ Leslie E. Kobayashi
Leslie E. Kobayashi
United States District Judge
WANDA VALENCIA, ET AL. V. CARRINGTON MORTGAGE SERVICES, LLC, ET
AL; CIVIL NO. 10-00558 LEK-RLP; ORDER (1) GRANTING IN PART AND
DENYING IN PART DEFENDANTS EQUITY FINANCIAL GROUP OF HONOLULU,
LLC, EQUITY FINANCIAL, LLC AND BRAD B. KANESHIRO’S OBJECTIONS TO
THE MAGISTRATE JUDGE’S FINDINGS AND RECOMMENDATION, (2) DENYING
PLAINTIFFS’ OBJECTIONS TO FINDINGS AND RECOMMENDATION, (3)
DENYING DEFENDANTS CARRINGTON MORTGAGE SERVICES, LLC, AND
DEUTSCHE BANK NATIONAL TRUST COMPANY’S CROSS-OBJECTIONS TO
PLAINTIFFS’ OBJECTIONS TO FINDINGS AND RECOMMENDATION, AND (4)
ADOPTING THE FINDINGS AND RECOMMENDATION AS MODIFIED
26
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