Paik-Apau v. Deutsche Bank National Trust Co. et al
Filing
96
ORDER (1) GRANTING DEFENDANT ROUTH CRABTREE OLSEN'S MOTION FOR SUMMARY JUDGMENT WITH REGARDS TO CAUSES 10, 11, AND 12 OF PLAINTIFF'S FIRST AMENDED CLAIM FILED ON MAY 16, 2011; (2) GRANTING DEFENDANTS AMERIQUEST MORTGAGE COMPANY AND AMERIQUE ST SECURITIES, INC.'S MOTION FOR SUMMARY JUDGMENT; (3) GRANTING DEFENDANT AMERICAN HOME MORTGAGE SERVICING, INC.'S JOINDER; AND (4) GRANTING IN PART AND DENYING IN PART DEFENDANT DEUTSCHE BANK NATIONAL TRUST COMPANY'S JOINDER re 57 ; 60 ; 62 - Signed by CHIEF JUDGE SUSAN OKI MOLLWAY on 1/31/12. ("Summary judgment is GRANTED as to all claims against RCO, AMS, AMC, and AHMSI. Summary judgment is GRANTED as to Deutsche Bank with respect to Causes 12 and 13, but DENIED as to Causes 7 and 8.") (emt, )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). Bernadette M. Paik-Apau shall be served by first class mail at the address of record on February 1, 2012.
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
BERNADETTE M. PAIK-APAU
)
)
Plaintiff,
)
)
vs.
)
)
DEUTSCHE BANK NATIONAL TRUST )
CO., AS TRUSTEE IN TRUST OF
)
THE BENEFIT OF THE
)
CERTIFICATE HOLDERS FOR
)
AMERIQUEST MORTGAGE
)
SECURITIES TRUST 2005-R11;
)
AMERIQUEST MORTGAGE COMPANY; )
AMERIQUEST MORTGAGE
)
SECURITIES; AMERICAN HOME
)
MORTGAGE SERVICING, INC.;
)
ROUTH CRABTREE AND OLSEN,
)
)
Defendants.
)
)
_____________________________ )
CIVIL. NO. 10-00699 SOM/RLP
ORDER (1) GRANTING DEFENDANT
ROUTH CRABTREE OLSEN’S MOTION
FOR SUMMARY JUDGMENT WITH
REGARD TO CAUSES 10, 11, AND
12 OF PLAINTIFF’S FIRST
AMENDED CLAIM FILED ON MAY
16, 2011; (2) GRANTING
DEFENDANTS AMERIQUEST
MORTGAGE COMPANY AND
AMERIQUEST SECURITIES, INC.’S
MOTION FOR SUMMARY JUDGMENT;
(3) GRANTING DEFENDANT
AMERICAN HOME MORTGAGE
SERVICING, INC.’S JOINDER;
AND (4) GRANTING IN PART AND
DENYING IN PART DEFENDANT
DEUTSCHE BANK NATIONAL TRUST
COMPANY’S JOINDER
ORDER (1) GRANTING DEFENDANT ROUTH CRABTREE OLSEN’S
MOTION FOR SUMMARY JUDGMENT WITH REGARD TO CAUSES 10, 11, AND 12
OF PLAINTIFF’S FIRST AMENDED CLAIM FILED ON MAY 16, 2011;
(2) GRANTING DEFENDANTS AMERIQUEST MORTGAGE COMPANY AND
AMERIQUEST SECURITIES, INC.’S MOTION FOR SUMMARY JUDGMENT;
(3) GRANTING DEFENDANT AMERICAN HOME MORTGAGE SERVICING, INC.’S
JOINDER; AND (4) GRANTING IN PART AND DENYING IN PART
DEFENDANT DEUTSCHE BANK NATIONAL TRUST COMPANY’S JOINDER
I.
INTRODUCTION.
Plaintiff Bernadette Maria Paik-Apau (hereinafter
“Paik-Apau”), proceeding pro se, has filed suit against Deutsche
Bank National Trust Co. (“Deutsche Bank”), Ameriquest Mortgage
Company (“AMC”), Ameriquest Mortgage Securities (“AMS”), American
Home Mortgage Servicing, Inc. (“AHMSI”), and Routh Crabtree Olsen
(“RCO”) (collectively, “Defendants”), asserting a number of
1
claims relating to a foreclosure on her real property.
RCO, the law firm that represented Deutsche Bank when
it initiated foreclosure proceedings against Paik-Apau, now moves
for summary judgment against Paik-Apau on Causes 10 (breach of
fiduciary duty), 11 (noncompliance with section § 667-5 of Hawaii
Revised Statutes), and 12 (fraud by collusion for enrichment).
The motion is GRANTED.
Also before this court is a Motion for Summary Judgment
(“AMC Motion”) filed by AMC and AMS as to the claims asserted
against them.
Those claims sound in fraud and attempt to
invalidate the loan origination.
American Home Mortgage
Servicing, Inc. (“AHMSI”), and Deutsche Bank National Trust
Company (“Deutsche Bank”) filed their Joinder in Defendants
Ameriquest Mortgage Company and Ameriquest Mortgage Securities,
Inc.’s Motion for Summary Judgment (“Joinder”) to the extent the
AMC Motion is based on a release of claims in a settlement
agreement.
Summary judgment is GRANTED to AMC and AMS, GRANTED
to AHMSI, GRANTED to Deutsche Bank on Causes 12 and 13, but
DENIED as to Deutsche Bank on Causes 7 and 8.
II.
BACKGROUND FACTS.
Paik-Apau alleges that, on or around November 25, 2005,
she executed mortgage documents for a loan from AMC for $415,000.
See First Am. Claim (“FAC”) ¶ 9, ECF No. 46.
She alleges that,
on December 1, 2005, her mortgage was securitized in a pool of
2
mortgages referred to as “Ameriquest Mortgage Securities, Inc.
Asset-Backed Pass-Through Certificates, Series 2005-R11” under a
Pooling and Servicing Agreement among AMC, AMS, and Deutsche
Bank.
Id. ¶ 15.
She says that her mortgage note was sold by AMC
to AMS, then by AMS to a pool of investors for which Deutsche
Bank is the trustee.
Id. ¶ 16.
According to Paik-Apau, in or
around July 2006, AMC sold its servicing rights to Citi
Residential, which in turn sold its servicing rights to AHMSI.
Id. ¶ 11.
Paik-Apau alleges that, beginning in July 2009, she
attempted to discuss a possible loan modification with AHMSI, but
AHMSI did not respond to her correspondence.
Id. ¶ 13.
Paik-
Apau says that, on or around January 2, 2010, she received notice
that RCO had been retained to foreclose on her property.
¶ 17.
Id.
On January 7, 2010, RCO recorded a Notice of Mortgagee’s
Intention to Foreclose Under Power of Sale (“Notice of Intention
to Foreclose”) with the Bureau of Conveyances.
010” to “A1-012” to FAC, ECF No. 46-3.
See Exhibits “A1-
The Notice of Intention
to Foreclose is signed by Derek Wong, a Hawaii attorney, as
attorney for mortgagee Deutsche Bank.
Id.
Paik-Apau filed her Complaint for Emergency Injunctive
and Declaratory Relief and to Stay Foreclosure Sale and Extension
by Fraudulent Concealment on November 26, 2010.
No. 1.
See Compl., ECF
The court dismissed her complaint on April 15, 2011.
3
See
Order Dismissing Compl. with Leave to Amend, ECF No. 43.
On May
16, 2011, Paik-Apau filed her first amended complaint, titled
“First Amended Claim Deceptive and Misleading Statements;
Fraudulent Representations; Circumvention of HRS 502-63;
Fraudulent Documents; Fraudulent Misrepresentation of Time to
Cancel; Fraudulent Mortgage Assignment; Lack of Standing to
Foreclose; Negligence in Fiduciary Duty; Non-Compliance with HRS
667-5; Collusion for Enrichment; Extension by Fraud.”
ECF No. 46.
See FAC,
The FAC alleges, among other things, that AMC
fraudulently misrepresented certain facts during the loan
origination period and that Deutsche Bank lacks standing to
foreclose on her mortgage because her note and mortgage were
improperly transferred from AMC.
On June 29, 2011, attorney Derek Wong, on behalf of
Deutsche Bank, recorded a Notice of Rescission in the Bureau of
Conveyances that stated that “Mortgagee does hereby rescind,
cancel and withdraw said Notice of Mortgagee’s Intention to
Foreclose Under Power of Sale.”
See Exhibit “2” to Def. Routh
Crabtree Olsen’s Concise Statement of Facts in Support of its
Mot. For Summ. J. With Regard to Causes 10, 11 and 12 of Pl.’s
First Am. Claim Filed on May 16, 2011 (“RCO CSF”), ECF No. 61-3.
Paik-Apau alleges that she was not informed of the rescission
until RCO filed the present motion.
At the hearing on this
motion, RCO said that it is not required to notify the homeowner
4
of the rescission of a foreclosure and does not typically do so.
RCO’s Motion for Summary Judgment (“RCO Motion”) addresses the
three claims asserted against it.
The AMC Motion is premised on proceedings in multidistrict litigation and a consolidated class action (the “MDL”),
commenced in the United States District Court for the Northern
District of Illinois as In re Ameriquest Mortgage Co. Mortgage
Lending Practices Litigation, MDL No. 1715, Lead Case No. 057097.1
See Borrowers’ First Am. and Consolidated Class Action
Compl., attached as Exhibit “4” to Def. Ameriquest Mortgage
Company and Ameriquest Mortgage Securities, Inc.’s Concise
Statement of Material Facts in Support of Their Mot. for Summ. J.
(“AMC CSF”), ECF No. 58-8.
AMC was a named defendant in the MDL,
which involved various alleged wrongdoings regarding mortgage
loan origination.
Id.
As a part of the MDL, the parties entered
into a settlement agreement whereby the class released its claims
against the defendants in exchange for $22 million.
See
Settlement Agreement (“MDL Settlement Agreement”), attached as
Exhibit “5” to AMC CSF, ECF No. 58-9.
1
AMS was included in the
Pursuant to Rule 201 of the Federal Rules of
Evidence, the court takes judicial notice of the pleadings filed
in the MDL, including Borrower’s First Amended and Consolidated
Class Action Complaint (December 4, 2009), Settlement Agreement
(December 4, 2009), Order of Preliminary Approval of Class Action
Settlement (December 8, 2009), and Final Order and Judgment (June
29, 2010). See Defs. Ameriquest Mortgage Company and Ameriquest
Mortgage Securities, Inc.’s Request for Judicial Notice of
Adjudicative Facts, ECF No. 59.
5
settlement as an “Ameriquest Released Party,” and claims against
“Servicers, Investors and Trustees” were also released.
Id. at
14-15.
AMC and AMS claim that Paik-Apau was a putative class
member who was sent a class settlement notice in January 2010
informing her that she could opt out of the settlement.
Decl. of Amy Lake ¶¶ 5-6, ECF No. 58-3.
Apau filed the present lawsuit.
See
That was before Paik-
A class notice was also
published in USA Today and Parade.
Id. ¶ 9.
See class notice,
attached as Exhibit “6,” and published notice, attached as
Exhibit “7” to AMC CSF, ECF Nos. 58-10 and -11.
not respond to the class notice.
58-3.
Paik-Apau did
Decl. of Amy Lake ¶ 10, ECF No.
Paik-Apau claims that she did not receive the class notice
and that she did not know about the MDL until January, February,
or March 2010.
See Pl.’s Mem. in Opp’n to Mot. for Summ. J.
(“Opposition to AMC Motion”) at 5, 7, 10, ECF No. 74.
III. STANDARD OF REVIEW.
Summary judgment shall be granted when “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.”
R. Civ. P. 56(a) (2010).
Fed.
See Addisu v. Fred Meyer, Inc., 198
F.3d 1130, 1134 (9th Cir. 2000).
The movants must support their
position that a material fact is or is not genuinely disputed by
either “citing to particular parts of materials in the record,
6
including depositions, documents, electronically stored
information, affidavits or declarations, stipulations (including
those made for the purposes of the motion only), admissions,
interrogatory answers, or other materials”; or “showing that the
materials cited do not establish the absence or presence of a
genuine dispute, or that an adverse party cannot produce
admissible evidence to support the fact.”
Fed. R. Civ. P. 56(c).
One of the principal purposes of summary judgment is to identify
and dispose of factually unsupported claims and defenses.
Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986).
Summary judgment must be granted against a party that
fails to demonstrate facts to establish what will be an essential
element at trial.
See id. at 323.
A moving party without the
ultimate burden of persuasion at trial--usually, but not always,
the defendant--has both the initial burden of production and the
ultimate burden of persuasion on a motion for summary judgment.
Nissan Fire & Marine Ins. Co., Ltd. v. Fritz Cos., 210 F.3d 1099,
1102 (9th Cir. 2000).
The burden initially falls upon 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).
“When the moving party has carried its burden
7
under Rule 56(c), its opponent must do more than simply show that
there is some metaphysical doubt as to the material facts.”
Matsushita Elec. Indus. Co., Ltd. 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.
Elec. Serv., Inc., 809 F.2d at 630.
T.W.
At least some “‘significant
probative evidence tending to support the complaint’” must be
produced.
Id. (quoting First Nat’l Bank of Ariz. v. Cities Serv.
Co., 391 U.S. 253, 290 (1968)).
See Addisu, 198 F.3d at 1134 (“A
scintilla of evidence or evidence that is merely colorable or not
significantly probative does not present a genuine issue of
material fact.”).
“[I]f the factual context makes the non-moving
party’s claim implausible, that party must come forward with more
persuasive evidence than would otherwise be necessary to show
that there is a genuine issue for trial.”
Cal. Arch’l Bldg.
Prods., Inc. v. Franciscan Ceramics, Inc., 818 F.2d 1466, 1468
(9th Cir. 1987) (citing Matsushita Elec. Indus. Co., 475 U.S. at
587).
Accord Addisu, 198 F.3d at 1134 (“There must be enough
doubt for a ‘reasonable trier of fact’ to find for plaintiffs in
order to defeat the summary judgment motion.”).
All evidence and inferences must be construed in the
light most favorable to the nonmoving party.
8
T.W. Elec. Serv.,
Inc., 809 F.2d at 631.
Inferences may be drawn from underlying
facts not in dispute, as well as from disputed facts that the
judge is required to resolve in favor of the nonmoving party.
Id.
When “direct evidence” produced by the moving party
conflicts with “direct evidence” produced by the party opposing
summary judgment, “the judge must assume the truth of the
evidence set forth by the nonmoving party with respect to that
fact.”
IV.
Id.
THE RCO MOTION.
A.
Paik-Apau Fails To Raise Any Genuine Issue Of Material
Fact As To Cause 10.
Paik-Apau first asserts that RCO negligently breached a
fiduciary duty when it filed documents on behalf of Defendants to
institute foreclosure proceedings:
RCO illegally filed a foreclosure notice
knowing that DBNTC had no standing to
foreclose and that assignment was made only
to facilitate the foreclosure and to deceive
the Plaintiff and the court into believing
that DBNTC had standing, which it did not.
RCO as an attorney should have verified that
standing of its client to foreclose before
filing the Intent to Foreclosure [sic]
Notice. RCO was retained before the
assignment was signed and should have been
wary that both the Intent to Foreclose and
the assignment were being recorded on the
same day.
Compl. ¶ 60, ECF No. 46.
This claim appears to stem from Paik-
Apau’s misunderstanding of the nature of a fiduciary
relationship.
In her deposition, Paik-Apau testified that she
9
believed that any law firm owed her a fiduciary duty by virtue of
a lawyer’s ethical duties:
Q. Okay. What’s your understanding of
what fiduciary duty is?
A. To me, fiduciary, or fiduciary, as
you pronounce it, I don’t know whether it’s –
Q. --yeah, I’m not sure it’s right
either -A. --yeah. Is a duty as a lawyer to
know the, the laws regarding, in this case,
foreclosure actions and so forth, and who is
legally able to -- who has standing to
foreclose and so forth.
That’s my understanding of fiduciary
duty.
Q. Okay. So, in this count are you
claiming that RCO owed a fiduciary duty to
you?
A. Yes. I, I believe they do, as a
lawyer, as a law firm, that anything that
goes through that law firm should indeed be
upright, legal.
Pl. Dep. 236:16-237:5, Sept. 12, 2011, ECF No. 61-2.
These allegations do not give rise to a breach of
fiduciary duty.
Before a plaintiff may sue a defendant for
breach of a duty, the plaintiff must establish that the defendant
owed a duty to the plaintiff.
entirely a question of law.
The existence of a duty is
Bidar v. Amfac, Inc., 66 Haw. 547,
552, 669 P.2d 154, 158 (1983).
In determining whether a duty is
owed, the court “must weigh the considerations of policy which
favor the appellants' recovery against those which favor limiting
10
the appellees' liability.”
Blair v. Ing, 95 Haw. 247, 260, 21
P.3d 452, 465 (2001).
No law creates a general fiduciary duty owed by any law
firm to all individuals.
Paik-Apau appears to argue that RCO
owed her a duty based on a lawyer’s professional responsibility.
See Pl. Dep. 236:16-237:5, ECF No. 61-2.
Although a professional
may be liable to someone who has not retained that professional,
that claimant must show the existence of a relationship with the
professional giving rise to a duty of care.
See Blair, 95 Haw.
at 259, 21 P.3d at 464 (holding that “where the relationship
between an attorney and a non-client is such that we would
recognize a duty of care, the non-client may proceed under either
negligence or contract theories of recovery”).
Paik-Apau does
not allege a relationship between herself and RCO that gives rise
to any duty owed by RCO to her.
Paik-Apau only alleges that RCO
“should have verified that standing of its client to foreclose
before filing the Intent to Foreclosure [sic] Notice . . . .”
Compl. ¶ 60, ECF No. 46.
To the extent Paik-Apau bases her claim
on a fiduciary duty stemming from RCO’s professional status, the
claim fails, as Paik-Apau does not articulate a special
relationship giving rise to a fiduciary duty owed by RCO to her.
Nor did RCO, as counsel for Defendants, assume any
fiduciary duty owed by Defendants to Paik-Apau, as Defendants
owed no fiduciary duty to Paik-Apau:
11
Lenders generally owe no fiduciary
duties to their borrowers. See, e.g., Nymark
v. Heart Fed. Sav. & Loan Ass’n, 283 Cal.
Rptr. 53, 54 n.1 (Cal. App. 1991) (“The
relationship between a lending institution
and its borrower-client is not fiduciary in
nature.”); Miller v. U.S. Bank of Wash., 865
P.2d 536, 543 (Wash. App. 1994) (“The general
rule . . . is that a lender is not a
fiduciary of its borrower.”); Huntington
Mortg. Co. v. DeBrota, 703 N.E.2d 160, 167
(Ind. App. 1998) (“A lender does not owe a
fiduciary duty to a borrower absent some
special circumstances.”); Spencer v. DHI
Mortg. Co., 642 F. Supp. 2d 1153, 1161 (E.D.
Cal. 2009) (“Absent ‘special circumstances' a
loan transaction ‘is at arms-length and there
is no fiduciary relationship between the
borrower and lender.’”) (quoting Oaks Mgmt.
Corp. v. Super. Ct., 51 Cal. Rptr. 3d 561
(Cal. App.2006)); Ellipso, Inc. v. Mann, 541
F. Supp. 2d 365, 373 (D.D.C. 2008) (“[T]he
relationship between a debtor and a creditor
is ordinarily a contractual relationship
. . . and is not fiduciary in nature.”)
(citation omitted).
McCarty v. GCP Mgmt., LLC, Civil No. 10-00133 JMS/KSC, 2010 WL
4812763, *5 (D. Haw. Nov. 17, 2010).
B.
Cause 11, Alleging A Violation Of Hawaii Revised
Statutes § 667-5, Is Moot.
In Cause 11, Paik-Apau alleges that RCO violated
section 667-5 of Hawaii Revised Statutes by sending
correspondence from Washington, rather than Hawaii:
Correspondence received from RCO
originates from Washington State (Exhibit A1026) and not Hawaii. RCO deceptively has
tried to circumvent HRS 667-5 by using a
letterhead with the address of RCO’s alleged
local attorneys. If documentation is
generated in Washington State or elsewhere,
then the local attorney is acting only as a
12
vehicle to meet state law.
Compl. ¶ 63, ECF No. 46.
Section 667-5(a) requires a nonjudicial foreclosure to
be initiated by an attorney licensed by and located in Hawaii:
(a) When a power of sale is contained in a
mortgage, and where the mortgagee, the
mortgagee's successor in interest, or any
person authorized by the power to act in the
premises, desires to foreclose under power of
sale upon breach of a condition of the
mortgage, the mortgagee, successor, or person
shall be represented by an attorney who is
licensed to practice law in the State and is
physically located in the State.
Haw. Rev. Stat. § 667-5(a)(2011).
This provision ensures that
borrowers have someone located in Hawaii to contact about a
nonjudicial foreclosure, even if a lender does not have a Hawaii
office.
RCO’s Notice of Intent to Foreclose was signed by Derek
Wong as the attorney for mortgagee Deutsche Bank.
See Compl.
Exhibits “A1-010” to “A1-013”, ECF No. 46-3.2
The court does not even reach the merits of Cause 11,
because it is moot.
RCO filed a Notice of Rescission3 regarding
the foreclosure of Paik-Apau’s property.
In Saiki v. LaSalle
Bank Nat’l. Ass’n As Tr. For Structured Asset Investment Loan
2
According to the Hawaii State Bar Association
website, Wong is an active attorney in good standing who was
admitted to the state bar in 1986. He is listed as working for
RCO at their Hawaii address. See Hawaii State Bar Association,
http://www.myhsba.org/PublicDirectory/PublicDirectory.aspx?s=wong
, derek&m=004155 (last visited Jan. 18, 2012).
3
See Exhibit “2” to RCO CSF, ECF No. 61-3.
13
Trust Series 2003-BC2, Civil No. 10-00085 JMS/LEK, 2011 WL 601139
(D. Haw. Feb. 10, 2011), the court addressed this very issue.
that case, the court concluded that the notice of rescission
rendered the case moot, warranting judgment on the pleadings.
The court stated:
Plaintiff asserts that Defendants
violated § 667-5 by having Lorrie Womack, who
is neither an attorney licensed to practice
in Hawaii nor is located in Hawaii, sign the
Notice of Foreclosure. Defendants--who
appear to admit a violation of § 667-5-nonetheless argue that Plaintiff's claim is
moot because Cal-Western rescinded the Notice
of Foreclosure such that there is no live
controversy between the parties.
“[A] case is moot when the
issues presented are no longer live
or the parties lack a legally
cognizable interest in the
outcome.” Davis, 440 U.S. at 631
(citations and quotations omitted).
Voluntary cessation of challenged
conduct renders a claim moot if
“(1) it can be said with assurance
that there is no reasonable
expectation that the alleged
violation will recur, and (2)
interim relief or events have
completely and irrevocably
eradicated the effects of the
alleged violation.” Id. (citations
omitted). A defendant's voluntary
change in policy only renders a
claim moot if it is “ ‘a permanent
change’ in the way it [does]
business and [is] not a ‘temporary
policy that the agency will refute
once this litigation has
concluded.’” Smith v. Univ. of
Wash., Law Sch., 233 F.3d 1188,
1194 (9th Cir. 2000) (quoting White
v. Lee, 227 F.3d 1214, 1243 (9th
14
In
Cir. 2000)).
Although Defendants have a heavy burden,
even Plaintiff appears to recognize that the
Notice of Rescission moots any claims based
on the Notice of Foreclosure. See Pl.'s
Opp'n at 15 (conceding that “much of the
relief requested on an individual basis has
now become moot”). The court agrees that the
Notice of Rescission moots Plaintiff's claims
based on Notice of Foreclosure-there is no
existing controversy based on the Notice of
Foreclosure because Cal-Western rendered the
Notice of Foreclosure void by rescinding it.
In other words, Defendants cannot foreclose
on the subject property unless they issue a
new Notice of Foreclosure. Although
Defendants could conceivably issue another
Notice of Foreclosure that also fails to
comply with HRS § 667-5, that Notice of
Foreclosure would give rise to a separate
claim from what is alleged in the Complaint,
which is based on this particular Notice of
Foreclosure. Further, although Cal-Western
appears to admit it did not comply with the
requirements of § 667-5, Plaintiff cannot
seek equitable relief because the Notice of
Foreclosure is void, and Plaintiff is not
otherwise entitled to damages for this
defect.
Id. at *3-4.
Similarly, the foreclosure of Paik-Apau’s property has
been rescinded, rendering the Notice of Intent to Foreclose void.
Paik-Apau’s argument that RCO did not attempt to inform her of
the rescission does not save her claim, as she does not provide
any authority to support the proposition that the rescinding
party has an obligation to notify the homeowner or that a failure
15
to notify renders the rescission ineffective.4
4, ECF No. 76.
See Opposition at
To the extent Cause 11 was based on that
particular Notice of Intention to Foreclose, the claim is now
moot.
C.
Paik-Apau Fails To Raise Any Genuine Issue Of Material
Fact As To Cause 12.
Paik-Apau further asserts that all Defendants are
involved in a money-making scheme that is tantamount to fraud.
As to AMC, AMS, and Deutsche Bank, Paik-Apau alleges that the
three defendants negligently overlooked fraudulent acts and
encouraged fraud in the rush to expedite inclusion of her loan in
a securitized pool of mortgages.
Compl. ¶¶ 65-68, ECF No. 46.
As to RCO, Paik-Apau alleges that it was
also a part of this scheme to create further
enrichment for [itself] and the participants
of the securitized trust. Foreclosing on
mortgages, with most being bought by the
banks that foreclosed for a price below the
value of the loan, allows the securitization
process to begin again on the same property
thereby further enriches the participants in
the securitization scheme. Since all parties
had been paid in full, . . . RCO acted with
negligence and/or fraud in continuing to seek
monies from an obligation that does not
4
Regardless of whether RCO had a legal obligation to
provide Paik-Apau with notice that the foreclosure had been
halted, it certainly would have been logical and fair for RCO to
have sent the Notice of Rescission to Paik-Apau. The document
clearly has a direct impact on this lawsuit and could have
alleviated much of Paik-Apau’s worry and uncertainty. As the
court noted at the hearing on this issue, it made no sense to
keep from Paik-Apau a development so germane to her efforts to
keep her property.
16
exist.
Id. ¶ 69.
To the extent Paik-Apau bases Cause 12 on the mere
practice of securitization, her argument is without legal
support.
In Sarmiento v. Bank of N.Y. Mellon, Civil No. 10-00349
JMS/BMK, 2011 WL 884457 (D. Haw. Mar. 10, 2011), the court held
that the securitization process, in and of itself, does not give
rise to a cognizable claim:
The court further rejects that securitization
in general somehow gives rise to a cause of
action--Plaintiffs point to no law or
provision in the mortgage preventing this
practice, and otherwise cite to no law
supporting that securitization can be the
basis of a cause of action. Indeed, other
courts have likewise rejected that
securitization of a mortgage loan provides
the mortgagor a cause of action. See Joyner
v. Bank of Am. Home Loans, 2010 WL 2953969,
at *2 (D. Nev. July 26, 2010) (rejecting
breach of contract claim based on
securitization of loan); Haskins v. Moynihan,
2010 WL 2691562, at *2 (D. Ariz. July 6,
2010) (rejecting claims based on
securitization because Plaintiffs could point
to no law indicating that securitization of a
mortgage is unlawful, and “Plaintiffs fail to
set forth facts suggesting that Defendants
ever indicated that they would not bundle or
sell the note in conjunction with the sale of
mortgage-backed securities”); Lariviere v.
Bank of N.Y. as Tr., 2010 WL 2399583, at *4
(D. Me. May 7, 2010) (“Many people in this
country are dissatisfied and upset by [the
securitization] process, but it does not mean
that the Larivieres have stated legally
cognizable claims against these defendants in
their amended complaint.”); Upperman v.
Deutsche Bank Nat. Trust Co., 2010 WL
1610414, at *3 (E.D. Va. Apr. 16, 2010)
17
(rejecting claims because they are based on
an “erroneous legal theory that the
securitization of a mortgage loan renders a
note and corresponding security interest
unenforceable and unsecured”); Silvas v. GMAC
Mortg., LLC, 2009 WL 4573234, at *5 (D. Ariz.
Dec. 1, 2009) (rejecting a claim that a
lending institution breached a loan agreement
by securitizing and cross-collateralizing a
borrower's loan).
Id. at *6.
This court agrees that the securitization process,
without more, does not give Paik-Apau a cognizable claim for
fraud or “collusion by enrichment.”5
Paik-Apau fails to offer
any evidence that Defendants engaged in fraudulent collusion,
other than that they participated in the securitization of her
mortgage loan.
Clearly, Paik-Apau fails to offer any evidence
that RCO engaged in fraudulent collusion, as it was not even
involved in the securitization of her loans.
At most, it
represented an entity that was engaged in the securitization of
Paik-Apau’s loan.
That is not fraudulent collusion.
Paik-Apau’s arguments in response are unavailing.
Although she details some aspects of the securitization process,
5
Moreover, Rule 9(b) of the Federal Rules of Civil
Procedure requires that fraud be pled with particularity. To
comply with this rule, a plaintiff must clearly explain the
circumstances constituting fraud so that the defendants may
answer the allegations. See Neubronner v. Milken, 6 F.3d 666,
672 (9th Cir. 1993). Nor may a plaintiff lump all defendants
together; the fraudulent acts of each defendant must be
specified. See Swartz v. KPMG LLP, 476 F.3d 756, 764-65 (9th
Cir. 2007). Paik-Apau does not specify RCO’s particular acts in
this alleged scheme.
18
she fails to articulate how any of these features rises to the
level of fraud or an actionable conspiracy.
See Opposition to
RCO Motion at 12, ECF No. 76; Opposition to AMC Motion at 29-31,
ECF No. 74.
Her request that the court deny the Motion to allow
her to “continue her discovery and review of documents to
formulate her argument in a more complete manner” is also
unavailing, and in fact hints at Paik-Apau’s acknowledgment that
she currently lacks the factual basis for her claims.
Finally,
Paik-Apau’s reliance on a string of cases concerning criminal
conspiracy is irrelevant to the present civil case.
See id. at
13.
To the extent Cause 12 could be construed as a claim
for civil conspiracy (as Paik-Apau’s citation to criminal
conspiracy cases might suggest), the court is unpersuaded.
Hawaii courts do not recognize a stand-alone cause of action for
civil conspiracy; a civil conspiracy must derive from other
wrongs to be actionable.
See Weinberg v. Mauch, 78 Haw. 40, 49,
890 P.2d 277, 286 (1995).
As the securitization of Paik-Apau’s
loan is not itself actionable, a civil conspiracy claim cannot be
based on the securitization process.
as to Cause 12.
The RCO Motion is granted
The AMC Motion and Joinder are also granted as
to Cause 12.
19
V.
THE AMC MOTION.
A.
Summary Judgment Is Granted To AMS, AMC, And AHMSI, But
Counts 7 And 8 Remain Against Deutsche Bank.
This court, having reviewed the materials submitted and
arguments made in connection with the AMC Motion and the Joinder
in the AMC Motion, concludes that there are no genuine issues of
material fact with respect to claims against AMS, AMC, and AHMSI,
and that they are entitled to judgment as a matter of law on all
claims.
However, Deutsche Bank does not establish entitlement to
summary judgment on Counts 7 and 8.
B.
Paik-Apau Was Properly Put On Notice Of The MDL
Settlement Agreement, Which Released Her Claims Against
AMS.
AMC and AMS first argue that Paik-Apau was a class
member in the MDL, and that the settlement of the MDL effectively
released Paik-Apau’s claims against AMC and AMS.
To the extent
the settlement also released servicers and trustees, AHMSI and
Deutsche Bank join in this argument.
62.
See Joinder at 2-3, ECF No.
In response, Paik-Apau does not deny that she was a putative
class member included in the MDL settlement, but argues that she
did not receive an opt-out notice and therefore cannot be bound
by the settlement agreement.
10, ECF No. 74.
See Opposition to AMC Motion at 6-
Moreover, she argues that the MDL Settlement
Agreement does not apply to this case, as the releases contained
in the MDL Settlement Agreement excluded foreclosure actions.
See id. at 6.
20
Any dispute about whether Paik-Apau received the
settlement notice is immaterial, because her actual receipt of
the notice is not necessary to bind her to the terms of the MDL
Settlement Agreement.
The Ninth Circuit addressed this very
issue in Silber v. Mabon, 18 F.3d 1449 (9th Cir. 1994), in which
a putative class member claimed that he had not received the
class settlement notice and was therefore not afforded the
opportunity to opt out.
In holding that notice by mail and
publication were the “the best notice practicable” in that case
and sufficient to protect the class member’s due process rights,
the court said, “While Argyris was fortuitously unable to
exercise his right to opt out in a timely fashion, that fact
alone does not mean that the best practicable notice under the
circumstances was not given to absent class members.”
1454.
Id. at
The matter was remanded to the district court for a
determination only as to whether the class member who had not
timely opted out should have been given an extension to opt out
because the class settlement had not yet been approved.
circumstance is not present here.
That
The MDL Settlement Agreement
was approved on June 29, 2010, and Paik-Apau did not seek to opt
out before that date.
In the MDL, the court approved dissemination of
settlement notices to class members by mail and publication.
Exhibits “6” and “7” to AMC CSF, ECF Nos. 58-10 and -11.
21
See
It also
determined that those particular forms of notice provided
sufficient notice to all class members consistent with all
applicable requirements.
See Final Order and Judgment, attached
as Exhibit “9” to AMC CSF at 2, 4, ECF No. 58-13.
Under the
reasoning in Silber, Paik-Apau’s alleged failure to receive the
notice or to see the notice published in Parade and USA Today
does not free her from the class settlement.
That is, Paik-Apau
did not have to actually receive or see the class notice to be
bound by the MDL Settlement Agreement.
Paik-Apau argues that, even if she is bound, the MDL
Settlement Agreement does not apply to her claims, as there is an
exception applicable to foreclosure claims.
Under the MDL
Settlement Agreement, the defendants and certain of their
affiliates, including AMC and AMS,
shall be released from all claims, causes of
action, or liabilities of which any and all
Releasing Parties may or did have during the
Class Period, including without limitation,
in contract, in tort (including but not
limited to personal injury, and emotional
distress and RICO claims), statute,
regulation, or common law, whether in
arbitration, administrative, or judicial
proceedings, whether as individual claims or
as part of a class of claims or claims on
behalf of the general public, whether known
or unknown, suspected or unsuspected,
threatened, asserted or unasserted, actual or
contingent, liquidated or unliquidated, that
relate to or arise from the matters that were
alleged or asserted, or could have been
alleged or asserted in the FACC and/or the
Consolidated Actions[.]
22
See MDL Settlement Agreement § VIII.A, ECF No. 58-9.
The MDL Settlement Agreement similarly releases other
related entities (including AHMSI and Deutsche Bank): “All
Servicers, Investors and Trustees (collectively, the ‘Additional
Released Parties’) shall be released from all claims, causes of
actions, or liabilities of which any and all Releasing Parties
may have had during the Class Period . . . .”
Id. § VIII.B.
However, the MDL Settlement Agreement also provides,
“Notwithstanding the foregoing, the release of the Additional
Released Parties extends only to Additional Released Claims based
upon or arising out of conduct of the Ameriquest Released Parties
and does not apply to claims based upon or arising out of the
direct conduct of any Additional Released Party.”
Id.
With respect to AMC and AMS, Paik-Apau argues that the
release is not applicable to AMC and AMS, because of what she
refers to as the foreclosure exception:
Notwithstanding any language herein, the
release given to Ameriquest Mortgage Company;
AMC Mortgage Services, Inc. (FKA Bedford Home
Loans, Inc.); Town & Country Credit
Corporation; Olympus Mortgage Company (NKA
Bedford Home Loans, Inc.); and Argent
Mortgage Company, LLC (collectively, the
“Originator Defendants”) and to the
Additional Released Parties6 shall not extend
to, and shall have no effect on statutory or
common law foreclosure claims and defenses
6
The “Additional Released Parties” refers to
“Servicers, Investors and Trustees.” See MDL Settlement
Agreement § VIII.B, ECF No. 58-9.
23
raised in response to, an actual or
threatened judicial or non-judicial
foreclosure of any loan originated by a
Defendant to a Class Member who is a borrower
and whose loan has not been paid off or
liquidated as of the Final Approval Date.
This exception to the Released Claims shall
not apply to any Ameriquest Released Party7
other than the Settling Defendants and is, in
any event, not intended to, and shall not,
permit affirmative recovery of monetary
damages in connection with any foreclosurerelated, or other, proceeding.
See MDL Settlement Agreement § VIII.C, ECF No. 58-9 (emphasis
added).
Conversely, AMC and AMS argue that Paik-Apau’s claims do
not involve “statutory or common law foreclosure claims and
defenses raised in response to . . . foreclosure.”
See Defs.
Ameriquest Mortgage Co. and Ameriquest Mortgage Securities,
Inc.’s Reply Mem. in Supp. of Their Mot. For Summ. J. at 4, ECF
No. 78.
Even construing all evidence in the light most
favorable to Paik-Apau, the foreclosure exception does not save
Paik-Apau’s claims against AMS.
AMS is one of the “Ameriquest
Released Parties” released pursuant to section VIII.C of the MDL
Settlement Agreement.
The foreclosure exception “shall not apply
to any Ameriquest Released Party other than a Settling
Defendant.”
As AMS is not a Settling Defendant, the foreclosure
exception does not apply to AMS.
7
Summary judgment is granted to
The “Ameriquest Released Parties” refers to a number
of entities and their affiliates, including AMS. See MDL
Settlement Agreement § VIII.A, ECF No. 58-9.
24
AMS as to all claims against it.
C.
Even If Claims Against AMC Were Not Released, Those
Claims Fail Substantively.
Paik-Apau’s claims against the other Defendants are not
so easily disposed of.
Paik-Apau instituted this case “in
response to . . . threatened judicial or non-judicial foreclosure
of any loan originated by a Defendant . . . .”
Agreement § VIII.C, ECF No. 58-9.
MDL Settlement
At the time Paik-Apau filed
her original Complaint, she believed that Deutsche Bank had
instituted foreclosure proceedings against her and filed the
Complaint in an effort to halt those proceedings.
See, e.g.,
Compl. ¶¶ 35, 58-59, ECF No. 1; Notice of Mortgagee’s Intention
to Foreclose Under Power of Sale dated January 7, 2010, attached
as Exhibit “9” to Pl.’s Mem. in Opp’n to Def. Routh Crabtree
Olsen Mot. for Summ. J., ECF No. 76.
The FAC similarly reflects
Paik-Apau’s intention to use this lawsuit as a defense to the
foreclosure proceedings.
46.
See, e.g., FAC ¶¶ 17-18, 35, ECF No.
The Notice of Rescission signed by RCO on June 29, 2011, was
recorded after the FAC was filed on May 16, 2011, and Paik-Apau
claims that she did not know that the foreclosure proceedings had
ceased.
See Opposition to RCO Motion at 4, ECF No. 76; Notice of
Rescission, attached as Exhibit “1” to Opposition to RCO Motion,
ECF No. 76.
The effect of the rescission of the foreclosure notice
on Paik-Apau’s claims, designed as defenses to any foreclosure,
25
is unclear.
Arguably, if the foreclosure exception is given its
broadest reading, Paik-Apau may still proceed.
Unlike AMS, AMC
was not released by the MDL Settlement Agreement.
The
foreclosure exception provided that it “shall not apply to any
Ameriquest Released Party [including AMS] other than the Settling
Defendants . . . .”
58-9.
MDL Settlement Agreement § VIII.C, ECF No.
As AMC is included in the definition of “Settling
Defendants” in the MDL Settlement Agreement, id. at 1, the
foreclosure exception is applicable to AMC as a “Settling
Defendant.”
The MDL Settlement Agreement does not release Paik-
Apau’s claims against AMC to the extent they are her response to
a foreclosure.
Whether she may continue to maintain those claims
independent of any foreclosure is questionable.
However, the
court need not resolve this issue because, even if the
foreclosure exception does not bar her claims, Paik-Apau may not
proceed with meritless claims.
Turning to the substance of her
claims against AMC, the court finds that Paik-Apau raises no
triable issue against AMC.
1.
Paik-Apau Fails To Raise Any Genuine Issue Of
Material Fact As To Cause 1.
Paik-Apau’s first cause of action is against AMC for
deceptive and fraudulent statements.
She alleges that AMC
fraudulently represented that she was not required to purchase
flood insurance in an effort to induce her to enter into the
mortgage transaction.
She states that she would not have
26
consummated the loan had she known she also would have to
purchase flood insurance.
See FAC ¶ 28, ECF No. 46.
It appears that all of Paik-Apau’s claims against AMC
sound in fraud.
To state a claim for fraud, Paik-Apau must
establish that (1) false representations were made by the
defendant, (2) with knowledge of their falsity (or without
knowledge of their truth or falsity), (3) in contemplation of her
reliance upon them, and that (4) she detrimentally relied on
them.
See Hawaii’s Thousand Friends v. Anderson, 70 Haw. 276,
286, 768 P.2d 1293, 1301 (1989).
The circumstances constituting
the alleged fraud must be pled with particularity.
Fed. R. Civ.
P. 9(b); Kearns v. Ford Motor Co., 567 F.3d 1120, 1125 (9th Cir.
2009).
Paik-Apau does not demonstrate that AMC is liable to
her for having made false representations concerning her flood
insurance.
At the signing of her loan documents on November 25,
2005, Paik-Apau claims that AMC presented her with a Notice to
Borrower Not In Special Flood Hazard Area, which stated that she
did not need to purchase flood insurance.
See Notice to Borrower
Not In Special Flood Hazard Area, attached as Exhibit “A1-013” to
FAC, ECF No. 46.
Paik-Apau also claims that she received a
document stating that her property is indeed in a special flood
hazard area, apparently on the same day she received the Notice
to Borrower.
See Standard Flood Hazard Determination, attached
27
as Exhibit “A1-014” to FAC, ECF No. 46.
Paik-Apau appears to be
saying the Notice to Borrower was a fraudulent statement, even if
AMC gave her a contrary document on the same day.8
Quite apart from the lack of evidence that AMC intended
that Paik-Apau rely on the Notice to Borrower (a matter called
greatly into question by the simultaneous provision of a contrary
document), Paik-Apau provides no evidence that she actually did
rely on the allegedly false statement.
At the time Paik-Apau
entered into the loan, she knew that her property was located in
a flood zone and that flood insurance was required on the
8
Paik-Apau testified:
Q. I’m trying to understand the nature
of this claim. You obtained the loan under
the understanding that you did not need flood
insurance?
A. That’s what I believed, yes.
Q. And when did you learn that you
needed flood insurance?
A. Apparently, probably on that day
[November 25, 2005]. . . .
Q. And you found out on the same day
that you did need flood insurance.
A. I said apparently, because in
looking at the documents you sent me there
was something signed. So I have to assume
that on that day.
. . .
Q. So, in fact, you were informed [that
you] needed flood insurance?
A. What I’m saying is I signed the
document, it appears, that says I need flood
insurance. I don’t recall that document. I
recall signing a bunch of documents.
Pl. Dep. 99:21-101:23, ECF No. 58-7.
28
property.
See Pl. Dep. 113:14-16; 114:8-12, 115:3-11, attached
as Exhibit “3” to AMC CSF, ECF No. 58-7.
Paik-Apau already had
flood insurance covering her property, and she has continued to
maintain that policy to the present.
See First Insurance Company
of Hawaii Renewal Flood Insurance Policy Declarations, attached
as Exhibit “11” to AMC CSF, ECF No. 58-15.
Paik-Apau does not
establish that she reasonably relied on the Notice to Borrower.
At most, she says that, had AMC more clearly told her that she
continued to be required to have flood insurance, she “would have
thought seriously about it.
[consummate the loan].”
Whether I would or would not
Pl. Dep. 99:15-16, ECF No. 58-7.
Because Paik-Apau fails to establish that AMC made a
false representation that it intended that she rely on, or that
she relied on such a representation to her detriment, the AMC
Motion is granted as to Cause 1.
2.
Paik-Apau Fails To Raise Any Genuine Issue Of
Material Fact As To Cause 2.
Paik-Apau’s second cause of action against AMC is for
fraudulent representation as a lender.
Essentially, Paik-Apau
alleges that AMC fraudulently represented itself as the lender,
when it in fact knew that her loan would soon thereafter be
securitized and sold to investors.
FAC ¶ 30, ECF No. 46.
Again, Paik-Apau fails to establish that AMC made a
false statement on which she detrimentally relied.
representation as a lender was not fraudulent.
29
AMC’s
In the executed
loan documents, AMC is identified as the lender.
See Adjustable
Rate Note, attached as Exhibit “1” to AMC CSF, ECF No. 58-5;
Mortgage, attached as Exhibit “2” to AMC CSF, ECF No. 58-6.
The
Note also states, “I understand that the Lender may transfer this
Note.
The Lender or anyone who takes this Note by transfer and
who is entitled to receive payments under this Note is called the
‘Note Holder.’”
See Adjustable Rate Note, ECF No. 58-5.
Paik-Apau fails to demonstrate why these
representations are false.
AMC was the original lender in Paik-
Apau’s mortgage transaction, and the possibility that Paik-Apau’s
mortgage note might later be transferred to another entity did
not make AMC’s representation false. Although “a promise made
without the present intent to fulfill the promise is actionable
as fraud,” Eastern Star, Inc. v. Union Bldg. Materials Corp., 6
Haw. App. 125, 140, 712 P.2d 1148, 1159 (Haw. Ct. App. 1985), the
Hawaii Supreme Court has stated that, as a general rule, “fraud
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, even if there is no excuse for failure to
keep the promise, and even though a party acted in reliance on
such promise.”
Stahl v. Balsara, 60 Haw. 144, 149, 587 P.2d
1210, 1214 (1978) (citations omitted).
30
Moreover, Paik-Apau does not point to any evidence that
she detrimentally relied on these statements.
While she says she
thought she would make payments to AMC, she does not explain how
she was injured by having to send payments to a different
entity.9
AMC’s transfer of the Note was not fraudulent and did
not, in and of itself, cause Paik-Apau any damage.
Summary
judgment is thus granted to AMC as to Cause 2.
9
Paik-Aupau testified:
Q. So it’s your belief that, because
your mortgage was sold into a pool,
Ameriquest is not the lender?
A. Not what I would call a lender. . . .
Q. And how has this caused you damages?
A. Well, I would normally have liked to
work with a company that was the one that
loaned me the money. I know who I’m paying,
why I’m paying it, and I can deal with that
company on a personal basis, if you will. To
me, that was important. . . .
Q. Now, other than your desire that you
would prefer to work with the lender and not
the servicer, how has this caused you
damages?
A. Well, if I had known, now, this is
an if-I-had-known-at-the-time that I would
not be dealing with the entity whom I signed
the loan for, I would very – more than likely
probably not have even signed the documents.
But I believe that they were the lender.
I truly believed that they would be the ones
that would be loaning me the money, and I
would be dealing with them, as a lender, not
as a servicer, not as some part of a complex
arrangement of, of mortgages pooled into
investments or securities.
Pl. Dep. 86:1-87:5, ECF No. 58-7.
31
3.
Paik-Apau Fails To Raise Any Genuine Issue Of
Material Fact As To Cause 3.
Paik-Apau’s third cause of action against AMC for
deceitful and fraudulent representation similarly fails, because
she does not establish a false statement on which she relied.
Paik-Apau alleges that AMC fraudulently and knowingly represented
itself as a “debt collector” without the required Fair Debt
Collection Practices Act (“FDCPA”) notices.
No. 46.
See FAC ¶ 32, ECF
Paik-Apau alleges that the statements, made by AMC in
fine print on the bottom of her mortgage loan statement, were
false because she was not late on her mortgage payments at that
time.
See Mortgage Loan Statement dated Aug. 8, 2006, attached
as Exhibit “A1-003” to FAC, ECF No. 46.
Paik-Apau fails to establish that the FDCPA recital at
the bottom of her mortgage statement is a false statement.
The
rote language does not indicate that Paik-Apau is in default or
otherwise late in making her mortgage payments.
AMC and AMS
further argue that even if such statements were false, they were
made by AMC Mortgage Services, Inc., rather than AMC, as
evidenced by the mortgage loan statement.
See id.
Additionally, Paik-Apau does not establish that she
relied on the alleged false representation.
The statements about
AMC’s status as a debt collector did not induce Paik-Apau to act
in any way, and she points to no detriment flowing from it.
Paik-Apau fails to identify any triable issue as to Cause 3,
32
As
summary judgment is granted to AMC on that claim.
4.
Paik-Apau Fails To Raise Any Genuine Issue Of
Material Fact As To Cause 4.
As to Cause 4, asserting circumvention of section 50263 of Hawaii Revised Statutes, and fraud, Paik-Apau alleges that
her marital status was altered from unmarried to married in the
recorded documents without the proper notarization.
See
Mortgage, attached as Exhibits “A1-016” and “A1-017” to FAC, ECF
No. 46; Trustee’s Deed (Limited Warranty), attached as Exhibits
“A1-018” and “A1-019” to FAC, ECF No. 46.
Even if AMC thereby
violated applicable state statutes, the marital status
designation was not a false statement on which Paik-Apau relied.
Nor does Paik-Apau offer evidence that she was injured by the
incorrect statement.
Paik-Apau did not discover the discrepancy
until after she had entered into the loan, Opposition to AMC
Motion at 14, ECF No. 74, so the statement could not have induced
her to execute the mortgage documents.
Paik-Apau raises a related argument concerning the
verification of her social security card, which she says is
incorrect and does not match her actual card.
See Opposition to
AMC Motion at 23, ECF No. 74; Exhibits “24” and “25” to
Bernadette Maria Paik-Apau’s Concise Statement of Material Facts
in Support of her Opp’n to Def.’s Mot. of Summ. J. (“Pl. CSF”),
ECF No. 74.
Paik-Apau points to no authority suggesting that an
incorrect social security card verification invalidates a
33
mortgage.
Paik-Apau offers no evidence that the verification was
fraudulent, as opposed to simply mistaken.
See Opposition to AMC
Motion at 23, ECF No. 74.
Paik-Apau also attempts to raise an issue of material
fact by alleging some type of misconduct by the notary.
As best
the court can surmise, Paik-Apau is arguing that the notary who
notarized her documents was a woman, but the name on the
notarization (“N. Olsen”) appears to Paik-Apau to be that of a
man.
See Opposition to AMC Motion at 23, ECF No. 74, Pl. Dep.
41:23-42:21, ECF No. 58-7; Mortgage at 15, ECF No. 58-6.
Paik-
Apau offers no evidence that AMC made any false representation
relating to the notary, or that Paik-Apau relied on the notary’s
name, such that the mortgage is invalid.
Even if AMC did violate section 502-63, Paik-Apau could
not prevail against AMC on that ground.
The only remedy under
that statute would be a fine of not more than $200,10 payable to
the state.
The statute does not make damages available to Paik-
Apau if she cannot establish damages flowing from a statutory
violation.
In her Opposition to AMC’s Motion, Paik-Apau attempts
to invoke a criminal statute, section 710-1069.5 of Hawaii
10
Section 502-62 of Hawaii Revised Statutes states,
“Every notary public or other person authorized to take
acknowledgments to instruments who takes the acknowledgment of
any person to any instrument in which there are interlineations,
erasures, or changes, and who fails to observe or perform the
requirements, or any of them, of section 502-61, shall be fined
not more than $200.”
34
Revised Statutes, which is equally inapplicable to a private
cause of action.
Summary judgment is granted to AMC as to Cause
4.
5.
Paik-Apau Fails To Raise Any Genuine Issue Of
Material Fact As To Cause 5.
In Cause 5, Paik-Apau alleges that AMC falsely created
a profit and loss statement that allowed her to borrow more than
she could repay.
See FAC ¶ 37, ECF No. 46.
Paik-Apau alleges in
the FAC that she did not create or sign the profit and loss
statement.
See Profit and Loss Statement, attached as Exhibit
“A1-020” to FAC, ECF No. 46.
Paik-Apau later recast her position
by saying, “She said she does not recall ever having prepared
something like it as it would not have been something she would
have done in that manner.”
No. 74.
Opposition to AMC Motion at 15, ECF
See Pl. Dep. 166:8-11, ECF No. 58-7 (“I’m not claiming I
prepared or did not prepare it.
I’m saying that I don’t recall
ever having done something like that, because it would not be
something I would do in that manner.”).
Paik-Apau also concedes
that her signature appears to be on the document, although she
cannot say for certain.
See Pl. Dep. 166:16-19, ECF No. 58-7.
Given Paik-Apau’s failure to come forward with evidence
of a fraudulent statement in connection with the profit and loss
statement, there is no material fact in dispute.
Paik-Apau also
does not argue that she relied on the profit and loss statement
or was induced to act thereby.
Thus, the profit and loss
35
statement does not serve as a viable basis for Cause 5.
Nor does the so-called Notice of Product Loan Change
support Paik-Apau’s allegation that the document was a
representation of her financial standing that led her to believe
she could afford to borrow more than she actually could.
See FAC
¶ 37, ECF No. 46; Estimated Interest Rate, Payment Due, Fees
Paid, and Prepayment Charge, attached as Exhibit “A1-021” to FAC,
ECF No. 46.
That document merely notes the monthly payment owed
by Paik-Apau based on a principal loan amount of $366,000 and
does not evidence that any loan amount was changed.
Id.
Paik-
Apau appeared to acknowledge as much in her deposition testimony.
See Pl. Dep. 169:10-20, ECF No. 58-7.11
A lender has no duty to
ensure that a borrower can make her monthly mortgage payments.
See McCarty v. GCP Mgmt., LLC, Civil No. 10-00133, 2010 WL
4812763, *5 (D. Haw. Nov. 17, 2010).
11
As Paik-Apau fails to
Paik-Apau testified:
Q. So, in document A1-2 -- 021, what is
it -- where in that document is Plaintiff’s
financial standing represented?
A. Let’s see. I’m trying to -- the
loan that was to be -- to have been
consummated was a $366,000 loan.
Q. Where -- Let me back up. Where is
your financial standing represented in this
document?
A. My standing is not represented here.
Q. It’s not, is it?
A. No.
Pl. Dep. 169:10-20, ECF No. 58-7.
36
provide evidence that the Notice of Product Loan Change makes any
false representation or induced her to enter into the loan by
making her believe she could afford the monthly payments, summary
judgment is granted to AMC as to Cause 5.
6.
Paik-Apau Fails To Raise Any Genuine Issue Of
Material Fact As To Cause 6.
In Cause 6, Paik-Apau alleges that AMC fraudulently
misrepresented the time for cancellation of the loan to “induce
Plaintiff to consummate a loan by offering to extend the time to
cancel the loan from three business days to five.”
ECF No. 46.
FAC ¶ 38.a,
Paik-Apau fails to establish that AMC made false
statements or that she relied on those allegedly false
statements.
In its Motion, AMC explains that, while Paik-Apau had
three days to cancel her loan under federal law, see Notice of
Right to Cancel, attached as Exhibit “A1-023” to FAC, ECF No. 46,
AMC offered borrowers a one-week cancellation period as a
courtesy.
See One Week Cancellation Period, attached as Exhibit
“A1-022” to FAC, ECF No. 46 (acknowledging that federal or state
law provides a three-day cancellation period, but stating that,
to “give you more time to study your loan documents, obtain
independent advice and/or shop for a loan that you believe suits
you better, we provide you with one-week . . . to cancel the
loan”).
loan.
Paik-Apau signed both documents and did not cancel the
She further admits that “at the time of the loan she had
37
no reason to cancel because she believed her loan was being
handled as a traditional lender/borrower transaction.”
Opposition to AMC Motion at 17, ECF No. 74.
Based on the documents provided by Paik-Apau, the court
finds no dispute of material fact as to the cancellation period.
AMC did not make a fraudulent statement when it provided PaikApau with documents referring to both the three-day period and
the one-week courtesy period.
Nor does Paik-Apau produce any
evidence that she relied on the representations.
176:7-177:5, ECF No. 58-7.
See Pl. Dep.
Summary judgment is granted to AMC as
to Count 5.
7.
Paik-Apau Fails To Raise Any Genuine Issue Of
Material Fact As To Cause 12.
As discussed earlier in this order in connection with
the RCO Motion, Paik-Apau fails to support her claim for fraud
and collusion.
Summary judgment is granted as to both the AMC
Motion and the Joinder with respect to Cause 12.
8.
Paik-Apau Fails To Raise Any Genuine Issue Of
Material Fact As To Cause 13.
Finally, in Count 13, Paik-Apau appears to assert
fraudulent concealment against all Defendants in an effort to
toll the statute of limitations for all or some of her claims.
Paik-Apau alleges that Defendants have “used predatory lending
practices and concealed from Plaintiff information that may have
otherwise caused Plaintiff to not consummate the loan.
38
As a
result of various fraudulent concealment, by the Defendants,
Plaintiff and family are now facing irreparable damage, injury,
loss, and harm should the Plaintiff’s family be eviction [sic]
there from.”
FAC ¶ 73, ECF No. 46.
Plaintiff requests leave of
the court to allow further discovery from Defendants and an
extension of the statute(s) of limitations under section 657-20
of Hawaii Revised Statutes.
Paik-Apau’s allegation of fraudulent concealment fails
because she does not provide evidence of any fraud perpetrated by
any particular Defendant.
of fraud.
Fraudulent concealment is just a form
See Tachibana v. Colo. Mountain Dev., Inc., No. 07-CV-
00364, 2011 WL 1327113, *3 n.7 (D. Haw. Apr. 5, 2011) (“We
interpret the reference to ‘fraudulent concealment’ as simply a
means of clarifying for Defendants that the type of fraud alleged
includes fraud by omission and concealment, and not just
affirmative conduct.”); Sung v. Hamilton, 710 F. Supp. 2d 1036,
1047 (D. Haw. 2010) (treating a fraudulent concealment claim as
fraud based on alleged failures to disclose information);
Associated Eng’rs & Contractors, Inc. v. State, 58 Haw. 187, 21920, 567 P.2d 397, 418 (1977) (“Fraud in its generic sense,
especially as the word is used in courts of equity, comprises all
acts, omissions and concealments involving a breach of legal or
equitable duty and resulting in damage to another.”).
A claim
for fraudulent concealment is therefore evaluated under the same
39
four elements of fraud discussed above.
Sung, 710 F. Supp. 2d at
1047.
Paik-Apau only argues that “Defendants collectively
enabled and encouraged a system of deceit and concealment leading
to and resulting in the illegal foreclosure on Plaintiff’s
Property.”
FAC ¶ 74, ECF No. 46.
She fails to present evidence
of any specific fraudulent statement or act by Defendants.
Opposition to AMC Motion at 33, ECF No. 74.
not even identify what was concealed.
See
Tellingly, she does
In short, she provides no
basis for tolling the statute of limitations period for any
claim.
Paik-Apau complains that she did not receive certain
discovery from Defendants until after her deposition, but she
does not detail whether Defendants were at fault in this regard
or how her deposition testimony might have changed had she
received discovery earlier.
Nor is the filing of any motion by
itself a reason to extend discovery or the statute of limitations
on any claim.
2011.
Paik-Apau’s deposition occurred on September 12,
See Opposition to AMC Motion at 3, ECF No. 74.
AMC and
AMS filed their Motion on October 5, 2011, and Paik-Apau served
Defendants with discovery requests the following day.
Id.
Her
receipt of responses to her requests in November 2011 does not
implicate any discovery abuse or other impropriety.
40
The court
grants summary judgment in favor of all Defendants as to Cause
13.
D.
Deutsche Bank Does Not Meet Its Burden As To Causes 7
And 8.
To the extent Paik-Apau’s claims against Deutsche Bank
are based on their direct wrongdoing, rather than deriving from
any wrongdoing by other Defendants, such claims are not barred by
the MDL Settlement Agreement.
The releases in the MDL Settlement
Agreement explicitly do not “apply to claims based upon or
arising out of the direct conduct of any Additional Released
Party,” such as Deutsche Bank.
MDL Settlement Agreement
§ VIII.B, ECF No. 58-9.
Causes 7 (DBNTC: Fraudulent Assignment) and 8 (DBNTC:
Lack of Standing to Foreclose) facially assert claims against
Deutsche Bank based on Deutsche Bank’s own wrongdoing, rather
than on wrongdoing by other Defendants.
No. 46.
See FAC ¶¶ 39-70, ECF
Deutsche Bank’s assertion that “Plaintiff has previously
released and discharged all claims arising out of her residential
mortgage loan transaction with Ameriquest Mortgage Company, which
includes potential claims against servicers, investors, and
trustees like AHMSI and DBNTC” goes too far.
Joinder at 3, ECF
No. 62.
Deutsche Bank has not moved for summary judgment by
filing its own motion.
Instead, it has joined in the AMC Motion,
adopting AMC’s arguments.
AMC’s arguments did not address Causes
41
7 and 8 because those claims were asserted only against Deutsche
Bank.
Deutsche Bank’s Joinder said nothing relevant to Cause 7
or Cause 8 to the extent those claims alleged wrongdoing by
Deutsche Bank itself.
Because the Joinder seeks summary judgment
insofar as claims were released under the MDL Settlement
Agreement, and because that settlement did not cover Causes 7 and
8, summary judgment as to Causes 7 and 8 is denied.
For the
reasons discussed earlier in this order, summary judgment is
granted to Deutsche Bank as to Causes 12 and 13.
The court takes no position as to the merits of Causes
7 and 8.
The court clarifies for Paik-Apau’s sake that the
Joinder was denied as to Causes 7 and 8 because Deutsche Bank did
not make any independent argument regarding the substantive bases
of the two claims and only relied on the arguments forwarded in
the AMC Motion, which were inapplicable to Causes 7 and 8.
E.
AHMSI Is Entitled To Summary Judgment On Cause 9.
Paik-Apau’s claims against AHMSI are subject to the
same release exception applicable to Deutsche Bank, but Paik-Apau
has not alleged any claim against AHMSI arising out of its own
wrongdoing.
While she asserts Cause 9 (Deceptive and Misleading
Statements) against AHMSI, Cause 9 on its face does not allege
any wrongdoing at all, and Paik-Apau presents no evidence
supporting Cause 9.
In Cause 9, Paik-Apau says AHMSI lacks authority to
42
modify her loans, but concedes that she has requested that AHMSI
modify her loan.
Paik-Apau states that she
is wary of a Loan Modification with AHMSI as
Plaintiff has reviewed documents of several
such documents and it appears to not only be
a one-side promissory note but it also
includes statements that preclude any suit a
borrower would have against all parties from
the loan originator to the participants in
the securitization of the mortgage pool. The
terms of the reviewed Loan Modification
Document leaves the borrower worse off than
before the modification (Exhibit). The
documents make it extremely difficult to
maintain the new terms of the loan.
FAC ¶ 58, ECF No. 46.12
Paik-Apau requests that the court halt
the loan modification process.
Id.
The court does not find any allegation of wrongdoing by
AHMSI in Cause 9.
A loan modification is an agreement that is
usually sought by a borrower requesting that the lender change
the terms of the loan.
When queried by the court on this issue,
Paik-Apau could not articulate how AHMSI was forcing her to do
something she did not want to do or why she could not walk away
from any potential loan modification if she felt it wrong or
unfair.
Because Paik-Apau has not articulated or provided
evidence of any harm caused by AHMSI that is relevant to Cause 9,
and because, on its face, Cause 9 does not appear premised on
12
Paik-Apau did not specify what exhibit her
allegations refer to, and stated at the hearing on this issue
that she had inadvertently failed to attach a sample of a loan
modification document.
43
actual wrongdoing, summary judgment is granted to AHMSI as to
Cause 9.
Summary judgment being also granted to AHMSI as to
Causes 12 and 13, as explained earlier, no claims remain against
AHMSI.
VI.
CONCLUSION.
Summary judgment is GRANTED as to all claims against
RCO, AMS, AMC, and AHMSI.
Summary judgment is GRANTED as to
Deutsche Bank with respect to Causes 12 and 13, but DENIED as to
Causes 7 and 8.
IT IS SO ORDERED.
DATED: Honolulu, Hawaii, January 31, 2012.
/s/ Susan Oki Mollway
Susan Oki Mollway
Chief United States District Judge
Paik-Apau v. Deutsche Bank National Trust Co., as Trustee in Trust of the
Benefit of the Certificate Holders for Ameriquest Mortgage Securities Trust
2005-R11 et al., Civ. No. 10-00699 SOM/RLP; Order (1) Granting Defendant Routh
Crabtree Olsen’s Motion for Summary Judgment With Regard to Causes 10, 11, and
12 of Plaintiff’s First Amended Claim Filed on May 16, 2011; (2) Granting
Defendants Ameriquest Mortgage Company and Ameriquest Securities, Inc.’s
Motion for Summary Judgment; (3) Granting Defendant American Home Mortgage
Servicing, Inc.’s Joinder; and (4) Granting in Part and Denying in Part
Defendant Deutsche Bank National Trust Company’s Joinder.
44
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