Martin et al v. GMAC Mortgage Corporation et al

Filing 22

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' 13 MOTION FOR SUMMARY JUDGMENT. Signed by JUDGE LESLIE E. KOBAYASHI on November 30, 2011. (bbb, )CERTIFICATE OF SERVICEParticipants registered to receive electronic notifications received this document electronically at the e-mail address listed on the Notice of Electronic Filing (NEF). Participants not registered to receive electronic notifications were served by first class mail on the date of this docket entry

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
PHAROAH ORLANDO MARTIN and
KAREN RENEE NORTON,

)
)
)
)
Plaintiffs,
)
vs.
)
)
GMAC MORTGAGE CORPORATION;
)
)
GMAC MORTGAGE LLC; MORTGAGE
ELECTRONIC REGISTRATION
)
)
SYSTEMS; and DOES 1 through
)
20 inclusive,
)
)
Defendants.
_____________________________ )

CIVIL NO. 11-00118 LEK-BMK

ORDER GRANTING IN PART AND DENYING IN PART
DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT
On August 15, 2011, Defendants GMAC Mortgage
Corporation (“GMAC Corp.”), GMAC Mortgage LLC (“GMACM”), and
Mortgage Electronic Registration Systems (“MERS”) (all
collectively “Defendants”) filed the instant Motion for Summary
Judgment (“Motion”).

Plaintiffs Pharaoh Orlando Martin and

Karen Renee Norton (collectively “Plaintiffs”) filed their
memorandum in opposition on October 3, 2011, and Defendants filed
their reply on October 7, 2011.
on October 24, 2011.

This matter came on for hearing

Appearing on behalf of Defendants was

Peter Knapman, Esq., and appearing on behalf of Plaintiffs was
James Fosbinder, Esq.

After careful consideration of the Motion,

supporting and opposing memoranda, and the arguments of counsel,
Defendants’ Motion is HEREBY GRANTED IN PART AND DENIED IN PART

for the reasons set forth below.
BACKGROUND
Plaintiffs originally filed this action on February 24,
2011.

They filed their First Amended Complaint on April 13,

2011.

[Dkt. no. 4.]

The First Amended Complaint alleges the

following claims:
1)
2)
3)
4)
5)
6)
7)
8)

violations of the Sherman/Clayton Antitrust Acts by GMAC
Corp. and MERS (Count I);
violations of the Hawai`i Antitrust/ Antimonopoly Acts by
GMAC Corp. and MERS (Count II);
intentional misrepresentations by GMAC Corp. (Count III);
unfair and deceptive acts or practices (“UDAP”) by GMAC
Corp.;
breach of fiduciary duty by Defendants (Count V);
unjust enrichment by GMAC Corp. (Count VI);
slander of title claim by Defendants (Count VII); and
a claim for injunctive relief against GMACM (Count VIII).
The First Amended Complaint seeks: an order enjoining

the sale of Plaintiffs’ property during the pendency of this
action; a judgment of rescission of both mortgages and the line
of credit; statutory, treble, exemplary, and compensatory
damages; reasonable attorneys’ fees and costs; and any other
appropriate relief.
I.

[First Amended Complaint at pg. 51.]

Factual Background
In the instant Motion and their separate and concise

statement of facts in support thereof (“Defendants’ CSOF”),
Defendants present the pertinent facts as follows.
On December 9, 2005, Plaintiffs executed an
InterestFirst Adjustable Rate Note (“First Note”) in favor of
2

GMAC Corp. in the amount of $548,000.00.
Peter Knapp (“Knapp Decl.”), Exh. 1.]

[Defs.’ CSOF, Decl. of

The First Note was secured

by a Mortgage (“First Mortgage”), dated December 9, 2005, on 609
Loulu Way, Makawao, Hawaii 96768 (“the Property”).
Decl., Exh. 2.]

[Knapman

The First Mortgage was recorded in the Bureau of

Conveyances on December 29, 2005 as Doc. No. 2005-265228.

It

named MERS as the mortgagee, acting solely as the nominee of the
lender, GMAC Corp.

[Id. at 1-2.]

Also on December 9, 2005, Plaintiffs executed a Home
Equity Line of Credit Agreement (“LOC”) in favor of GMAC Corp.
for a principal amount of up to $137,000.00.

The LOC was secured

by an Open End Mortgage (“LOC Mortgage”), dated December 9, 2005,
on the Property.

[Knapman Decl., Exh. 3.]

The LOC Mortgage was

recorded in the Bureau of Conveyances on December 29, 2005 as
Doc. No. 2005-265229.

It named MERS as the mortgagee, acting

solely as GMAC Corp.’s nominee.

[Id. at 1-2.]

On March 15, 2006, Plaintiffs executed a note in favor
of GMAC Corp. for the principal amount of $137,000.00 (“Second
Note”).

The Second Note was secured by a Mortgage (“Second

Mortgage”), dated March 15, 2006, on the Property.
Decl., Exh. 4.]

[Knapman

The Second Mortgage was recorded in the Bureau

of Conveyances on March 17, 2006 as Doc. No. 2006-092705.

It

named MERS as the mortgagee, acting solely as the nominee of the
lender, GMAC Corp.

[Id. at 1-2.]

3

On January 13, 2011, MERS executed an Assignment of
Mortgage (“Assignment”) assigning “all beneficial interest under
that certain mortgage dated December 09, 2005, executed by
[Plaintiffs] . . . , mortgagor, and recorded in Bureau of
Conveyances in Regular System Document Instrument No. 2005-265228
on December 29, 2005” to GMACM.

[Knapman Decl., Exh. 5.]

The

Assignment, however, identified the subject property as 7012
Hawaii Kai Drive 1007, Makawao, HI 96768.

The Assignment was

recorded in the Bureau of Conveyances on January 25, 2011 as Doc.
No. 2011-014691.

[Id. at 1.]

Defendants state that Plaintiffs are in default on the
First Note and First Mortgage.

[Knapp Decl. at ¶¶ 6-7.]

On

January 25, 2011, GMACM mailed a letter to Plaintiffs notifying
them that GMACM intended to pursue a non-judicial foreclosure
under power of sale.
II.

[Id., Exh. 6.]

Motion
In the instant Motion, Defendants first note that

Plaintiffs allege Counts I and II (antitrust claims), Count V
(breach of fiduciary duty), and Count VII (slander of title)
against MERS.

Defendants argue that MERS cannot be held liable

for the allegedly wrongful acts that occurred during loan
origination because MERS acted only as the lender’s nominee.
[Mem. in Supp. of Motion at 5-7.]

4

As to the antitrust claims, Defendants assert that both
the federal and state claims are time-barred.
to four-year statutes of limitations.

Both are subject

Plaintiffs’ alleged injury

arose from GMAC Corp.’s agreement to name MERS as the mortgagee
and nominee.

Although Plaintiffs do not specify which mortgage

these claims relate to, Defendants argue that, no matter which
mortgage allegedly gave rise to the antitrust claims, all
possible antitrust claims are time-barred because any claim
arose, at the latest, by April 2010, and Plaintiffs did not file
this action until February 2011.

Further, even if Plaintiffs’

antitrust claims are not time-barred, Plaintiffs cannot establish
the required elements of those claims.

[Id. at 8-10.]

As to Count III, the fraud claim, Defendants contend
that it is based on: Plaintiffs’ allegation that GMAC Corp.
represented to Plaintiffs that they would be able to refinance,
even though GMAC Corp. knew that Plaintiffs would not be able to
do so because the Property did not comply with environmental
regulations; and Plaintiffs’ allegation that GMAC Corp.’s failure
to disclose that it intended to sell the First Mortgage
improperly induced them into agreeing to the transaction.
Defendants’ primary argument is that neither theory states a
viable claim because a fraud claim cannot be premised on future,
promissory events.

[Id. at 11-13.]

5

As to Count IV, the UDAP claim, Defendants first argue
that it is time-barred because it is also based on consummation
activities.

[Id. at 16.]

Defendants contend that Count V, breach of fiduciary
duty, fails as a matter of law under the general rule that a
financial institution owes no fiduciary duties to a borrower
where the institution did not exceed the traditional role as a
lender.

A fiduciary duty only arises where there is a special

relationship between the lender and the borrower, and none
existed here.

[Id. at 17-18.]

Defendants argue that Count VI, unjust enrichment,
fails because Plaintiffs cannot establish that GMAC Corp.
received a benefit in the mortgage transactions that it should
not retain.

Defendants emphasize that: Plaintiffs received the

benefit of the $700,000 they acquired through the mortgages;
Plaintiffs voluntarily and knowingly entered into the mortgage
transactions; and there is no evidence of any wrongdoing by
Defendants.

[Id. at 18-19.]

As to Count VII, slander of title, Defendants assert
that this claim fails as a matter of law because Plaintiffs
cannot establish any of the required elements for the claim.
Assignment does not disparage the Property in any way.
19-20.]

The

[Id. at

Defendants also note that this claim is based on the

assertion that the Assignment is invalid because the First Note

6

and the First Mortgage were separated, but courts have repeatedly
rejected this argument.

[Id. at 21.]

As to Count VIII, injunctive relief, Defendants argue
that the claim fails because there is no independent cause of
action for injunctive relief.

Further, Plaintiffs have not

established that they are entitled to injunctive relief.

[Id. at

21-22.]
Defendants therefore urge the Court to grant summary
judgment in their favor as to all claims.
III. Plaintiffs’ Opposition
Plaintiffs’ memorandum in opposition states that
Plaintiffs “have stated causes of action for Unfair and Deceptive
Acts or Practices and Slander of Title under Hawaii law, and for
that reason summary judgment should be denied as to those causes
of action.”

[Mem. in Opp. at 1-2.]

They also “believe that

their claims for unjust enrichment, quiet title, and injunctive
relief are unlikely to prevail as written.”

[Id. at 10 (citing

Phillips v. Bank of America, 2011 WL 240813 at *11-12 (Jan. 21,
2011)).]
claims.

Plaintiffs therefore request leave to amend those
[Id.]
The memorandum in opposition states that, in February

2008, Plaintiffs sought a loan modification with GMAC Corp., but
their application was denied because the Property does not
conform to Environmental Protection Agency regulations for large

7

capacity cesspools.

Plaintiffs emphasize that GMAC Corp. should

have been aware of those regulations at the time it entered into
the First Mortgage and the Second Mortgage.
First Amended Complaint at ¶¶ 52-58).]

[Id. at 2 (citing

Plaintiffs also state

that they tried to refinance with other lenders, but were
unsuccessful because those lenders believed that foreclosure was
imminent based on the Assignment.

[Id. at 2-3.]

The Court,

however, notes that Plaintiffs’ concise statement of facts
(“Plaintiffs’ CSOF”) does not contain any affidavits or
supporting documents addressing these allegations.
Plaintiffs emphasize that the Assignment references the
wrong property address.

[Id. at 3.]

They assert that the

Assignment is evidence that the foreclosure process is flawed and
that they “have recently learned of new information related to
the lack of authority conferred upon MERS ‘certifying officers’
that was not available to them at the time they filed the First
Amended Complaint that indicates that the Assignment is invalid,
and by extension false.”

[Id. at 3-4.]

Plaintiffs therefore

seek leave to file a second amended complaint.

[Id. at 4.]

As to the slander of title claim, Plaintiffs argue that
the Assignment has been published because it was publicly filed
with the Bureau of Conveyances.

Plaintiffs have also alleged

that Defendants knew the representations in the Assignment were
false, and this is all that is required to plead the state of

8

mind for slander of title.

Plaintiffs assert that whether

Defendants actually had that state of mind is a question of fact
which is not appropriate for summary judgment.

[Id. at 5-6.]

Plaintiffs emphasize that they do not allege that the Assignment
disparaged the Property; the Assignment disparaged Plaintiffs’
title to the Property.

Further, the Property is clearly

identified in the Assignment, which refers the First Mortgage
securing the Property.

Plaintiffs also allege that they have

sufficiently pled special damages in the First Amended Complaint
- the attorneys’ fees and costs incurred in trying to repair
their title.

Plaintiffs assert that it is not possible for them

to be more specific at this point, and the allegations they have
raised are sufficient.

[Id. at 6-7.]

Plaintiffs also argue that

there is sufficient evidence of their special damages due to
their inability to sell or otherwise dispose of the Property
because the Assignment was so widely disseminated as to deprive
them of a market that would have existed without the false
statements in the Assignment.

[Id. at 7-8.]

Plaintiffs claim

that they have sufficiently pled all the required elements for
this claim, and that there are genuine issues of fact to be
decided.

Plaintiffs therefore urge the Court to deny the Motion

as to the slander of title claim.
As to the UDAP claim, Plaintiffs allege that “MERS’
creation, and GMAC’s recording of the false Assignment fits

9

within the scope of H.R.S. §481A-3.”

[Id. at 9.]

Plaintiffs

also claim that their newly discovered facts about MERS’s
“certifying officers” will further support the slander of title
claim and the UDAP claim, and they ask the Court for leave to
amend.

[Id. at 8-9.]

Plaintiffs also state that they recently

learned that “their Mortgage and Note belong to a trust that has
not validly transferred its interest to GMAC or any other party.”
[Id. at 10.]

Plaintiffs urge the Court to exercise its

discretion and deny the Motion and allow them to amend their
complaint because there has been no discovery in this case.
at 10-11.]

[Id.

At the very least, Plaintiffs argue that the Court

should allow them to proceed with their slander of title and UDAP
claims.
IV.

[Id. at 12.]

Defendants’ Reply
In their reply, Defendants emphasize that Plaintiffs

have the burden to respond to the Motion with admissible evidence
sufficient to defeat summary judgment, but Plaintiffs have not
done so and have not raised any genuine issues of material fact.
[Reply at 2.]

Defendants point out that Plaintiffs’ CSOF does

not comply with Local Rule 56.1.

[Id. at 2-3.]

Defendants reiterate that the Assignment is valid, but
they also argue that Plaintiffs are not parties to the
Assignment, so Plaintiffs lack standing to object to MERS’s
ability assign rights to the First Mortgage.

10

Defendants also

argue that courts have consistently rejected the claim that MERS
does not have the authority to assign a mortgage.

[Id. at 3-5.]

As to Plaintiffs’ request to amend the unjust
enrichment, quiet title, and injunctive relief claims, Defendants
first point out that there is no quiet title claim in this case.
Further, a request for leave to amend is not a proper way to
avoid summary judgment.

Plaintiffs have therefore failed to meet

their burden as to the unjust enrichment and injunctive relief
claims.

[Id. at 7-8.]
Defendants point out that Plaintiffs’ memorandum in

opposition does not address Counts I, II, III, and V at all.
Thus, Defendants are entitled to summary judgment on those
claims.

[Id. at 8-9.]
As to the UDAP claim, Defendants reiterate that the

Assignment is not false.

Further, even if Plaintiffs’ claim that

MERS lacked authority to assign the mortgage passed summary
judgment, the UDAP claim fails because there is no deceptive act
and no reliance.

[Id. at 8-9.]

Similarly, Defendants argue that

the slander of title claim fails because the Assignment is not
false, and even if there was a triable issue about MERS’s
authority to assign the First Mortgage, Plaintiffs cannot
establish the elements of slander of title.

[Id. at 9-10.]

Defendants therefore urge the Court to grant summary
judgment in their favor as to all claims.

11

STANDARD
Pursuant to Federal Rule of Civil Procedure 56(a), a
party is entitled to summary judgment “if the movant shows that
there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.”
Summary judgment must be granted against a
party that fails to demonstrate facts to establish
what will be an essential element at trial. See
Celotex [Corp. v. Catrett], 477 U.S. [317,] 323
[(1986)]. A moving party has both the initial
burden of production and the ultimate burden of
persuasion on a motion for summary judgment.
Nissan Fire & Marine Ins. Co. v. Fritz Cos., 210
F.3d 1099, 1102 (9th Cir. 2000). The burden
initially falls on the moving party to identify
for the court “those portions of the materials on
file that it believes demonstrate the absence of
any genuine issue of material fact.” T.W. Elec.
Serv., Inc. v. Pac. Elec. Contractors Ass’n, 809
F.2d 626, 630 (9th Cir. 1987) (citing Celotex
Corp., 477 U.S. at 323). “A fact is material if it
could affect the outcome of the suit under the
governing substantive law.” Miller [v. Glenn
Miller Prods., Inc.], 454 F.3d [975,] 987 [(9th
Cir. 2006)].
When the moving party fails to carry its
initial burden of production, “the nonmoving party
has no obligation to produce anything.” In such a
case, the nonmoving party may defeat the motion
for summary judgment without producing anything.
Nissan Fire, 210 F.3d at 1102-03. On the other
hand, when the moving party meets its initial
burden on a summary judgment motion, the “burden
then shifts to the nonmoving party to establish,
beyond the pleadings, that there is a genuine
issue for trial.” Miller, 454 F.3d at 987. This
means that the nonmoving party “must do more than
simply show that there is some metaphysical doubt
as to the material facts.” Matsushita Elec.
Indus. Co. v. Zenith Radio Corp., 475 U.S. 574,
586 (1986) (footnote omitted). The nonmoving
party may not rely on the mere allegations in the
pleadings and instead “must set forth specific
12

facts showing that there is a genuine issue for
trial.” Porter v. Cal. Dep’t of Corr., 419 F.3d
885, 891 (9th Cir. 2005) (quoting Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 256 (1986)).
“A genuine dispute arises if the evidence is such
that a reasonable jury could return a verdict for
the nonmoving party.” California v. Campbell, 319
F.3d 1161, 1166 (9th Cir. 2003); Addisu v. Fred
Meyer, Inc., 198 F.3d 1130, 1134 (9th Cir. 2000)
(“There must be enough doubt for a ‘reasonable
trier of fact’ to find for plaintiffs in order to
defeat the summary judgment motion.”).
On a summary judgment motion, “the nonmoving
party’s evidence is to be believed, and all
justifiable inferences are to be drawn in that
party’s favor.” Miller, 454 F.3d at 988
(quotations and brackets omitted).
Rodriguez v. Gen. Dynamics Armament & Technical Prods., Inc., 696
F. Supp. 2d 1163, 1176 (D. Hawai`i 2010) (some citations
omitted).
DISCUSSION
I.

Claims Where Plaintiffs Failed to Oppose Summary Judgment
As set forth below, Defendants have met their burden of

establishing that there are no genuine issues of material fact as
to Counts I, II, III, and V.

Plaintiffs therefore had the burden

of establishing that there are genuine issues for trial.
Plaintiffs, however, failed to address these claims in their
memorandum in opposition.
A.

Count I (Violations of Federal Antitrust Laws)
Count I alleges that Defendants’ conduct violates the

Sherman Antitrust Act, 15 U.S.C. §§ 1, 2.
Complaint at ¶ 98.]

[First Amended

Plaintiffs allege that they are entitled to
13

bring their claim pursuant to the Clayton Antitrust Act, codified
at 15 U.S.C. § 15.

[Id. at ¶ 100.]

This district court, however, has recognized that:
The federal antitrust claims must have been
brought within four years after accrual. 5 U.S.C.
§ 15b; Pace Indus., Inc. v. Three Phoenix Co., 813
F.2d 234, 236 (9th Cir. 1987) (Sherman Act);
Conmar Corp v. Mitsui & Co. (U.S.A.), Inc., 858
F.2d 499, 501 (9th Cir. 1988) (Clayton Act). “A
cause of action in antitrust accrues each time a
plaintiff is injured by an act of the defendant
and the statute of limitations runs from the
commission of the act.” Pace, 813 F.2d at 237
(citing Zenith Radio Corp. v. Hazeltine Research,
Inc., 401 U.S. 321, 338 (1971)).
Phillips v. Bank of Am., N.A., Civil No. 10-00551 JMS-KSC, 2011
WL 2160583, at *7-8 (D. Hawai`i June 1, 2011).
Count I essentially alleges that GMAC Corp. named MERS
as the mortgagee and nominee in Plaintiffs’ “transaction” to:
(a) protect and insulate [GMAC Corp.] from
otherwise valid claims and defense by mortgagors
and borrowers by providing an intermediary in the
transaction; (b) provide a conduit for the
securitization, and exclusive access to the
business of servicing securitized mortgage loans
. . . ; and (c) eliminate competition in the real
residential (sic) loan industry . . . .
[First Amended Complaint at ¶ 97.]
Insofar as Count I is based on the naming of MERS as
the mortgagee and the lender’s nominee in the “transaction” in
question, the statute of limitations began to run from the
execution of the mortgage.

While it is not clear which of

Plaintiffs’ three mortgages is the “transaction” in question,

14

Plaintiffs entered into all three mortgages more than four years
before the filing of this action on February 24, 2011.

In

Phillips, the district judge acknowledged that a continuing
violation theory, or equitable tolling, can apply to a federal
antitrust claim, but
[a] continuing violation theory . . . requires at
least one act within the limitations period, and
none is alleged here. Generally, “[e]quitable
tolling may be applied if, despite all due
diligence, a plaintiff is unable to obtain vital
information bearing on the existence of his
claim.” Santa Maria v. Pac. Bell, 202 F.3d 1170,
1178 (9th Cir. 2000); see also O’Donnell v.
Vencor, Inc., 465 F.3d 1063, 1068 (9th Cir. 2006)
(“Equitable tolling is generally applied in
situations ‘where the claimant has actively
pursued his judicial remedies by filing a
defective pleading during the statutory period, or
where the complainant has been induced or tricked
by his adversary’s misconduct into allowing the
filing deadline to pass.’” (quoting Irwin v. Dep’t
of Veterans Affairs, 498 U.S. 89, 96 (1990))).
2011 WL 2160583, at *7 (alteration in Phillips).
Defendants have presented evidence that Plaintiffs
entered into the first loan and the LOC loan on December 9, 2005,
and they entered into the second loan on March 15, 2006, and
Plaintiffs did not bring this action until February 24, 2011.
[Knapp Decl., Exh. 1; Knapman Decl., Exhs. 2-4.]

Defendants

therefore carried their summary judgment burden of establishing
that Count I appears time-barred, shifting the burden to
Plaintiff to establish that there is a genuine issue for trial
because equitable tolling may apply.

15

Cf. Caniadido v.

MortgageIT, LLC, Civil No. 11-00078 JMS/BMK, 2011 WL 3837265, at
*8 (D. Hawai`i Aug. 26, 2011).

Plaintiffs, however, have not

presented any facts that would support a finding that there is a
triable issue of fact regarding equitable tolling, in fact they
did not respond to the Motion as to Count I at all.
The Court therefore CONCLUDES that Plaintiffs’ Sherman
Act/Clayton Act claim is time-barred and GRANTS Defendants’
Motion as to Count I.
B.

Count II (Violations of State
Antitrust/Antimonopoly Laws)
Count II alleges a violation of Haw. Rev. Stat. § 480-9

based on the same conduct alleged in Count I.

[First Amended

Complaint at ¶ 105.]
Claims under § 480-9 are also subject to a four-year
statute of limitations.

Haw. Rev. Stat. § 480-24(a).

None of

the tolling provisions in § 480-24(b) apply in the instant case.
This district court has ruled “to construe HRS Ch. 480 in
accordance with federal cases interpreting similar federal
antitrust laws such as 15 U.S.C. § 15b, . . . the statute of
limitations on a HRS Ch. 480 claim may be tolled under the
equitable tolling doctrine of fraudulent concealment.”

Rundgren

v. Bank of New York Mellon, 777 F. Supp. 2d 1224, 1231 (D.
Hawai`i 2011).

Plaintiffs, however, have not presented any

evidence that would support a finding that fraudulent
concealment, or any other applicable equitable tolling doctrine,
16

applies.
For the same reasons as set forth regarding Count I,
this Court also CONCLUDES that Count II is time-barred and GRANTS
Defendants’ Motion as to Count II.
C.

Count III (Intentional Misrepresentation)
Count III alleges an intentional misrepresentation

claim against GMAC Corp.

[First Amended Complaint at ¶¶ 108-23.]

Under Hawai`i law, the elements of a fraudulent or
intentional misrepresentation claim are: “(1) false
representations made by the defendant; (2) with knowledge of
their falsity (or without knowledge of their truth or falsity);
(3) in contemplation of plaintiff’s reliance upon them; and (4)
plaintiff’s detrimental reliance.”

Miyashiro v. Roehrig,

Roehrig, Wilson & Hara, 122 Hawai`i 461, 482-483, 228 P.3d 341,
362-63 (Ct. App. 2010) (citing Hawaii’s Thousand Friends v.
Anderson, 70 Haw. 276, 286, 768 P.2d 1293, 1301 (1989)).
Plaintiffs base this claim on GMAC Corp.’s alleged
representation that Plaintiffs would be able to refinance the
loans with GMAC Corp. after Plaintiffs built equity and a
favorable payment history.

Plaintiffs allege that, when GMAC

Corp. made this representation, it knew or should have known that
the Property did not comply with environmental regulations.
[First Amended Complaint at ¶¶ 110-12.]

The First Amended

Complaint also alleges that, when GMAC Corp. made the loans to

17

Plaintiffs, it “failed to disclose to Plaintiffs that it would
arbitrarily rely upon the Subject Property’s non-compliance with
the EPA LCCR as a basis for its refusal to honor its commitment
to refinance their loans.”

[Id. at ¶ 113.]

The First Amended

Complaint also alleges that GMAC Corp. knew or should have known
that no other lender would refinance Plaintiffs’ loan without
costly renovations to address the non-compliance with
environmental regulations, but GMAC Corp. failed to disclose this
to Plaintiffs.

[Id. at ¶¶ 114-15.]

Plaintiffs further allege

that GMAC Corp. failed to disclose that it intended to sell
Plaintiffs’ mortgage.

[Id. at ¶ 116.]

Even viewing the fact in the light most favorable to
Plaintiffs, this claim fails because, under Hawai`i law, the
false representation forming the basis of a fraud claim “must
relate to a past or existing material fact and not the occurrence
of a future event.”

Joy A. McElroy, M.D., Inc. v. Maryl Group,

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

Further, even if the allegations satisfy the other

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

18

Id. (citations and block quote format omitted) (emphasis in
original).

The exception to this general rule is that “[a]

promise relating to future action or conduct will be actionable,
however, if the promise was made without the present intent to
fulfill the promise.”

Id. (citations and block quote format

omitted) (emphasis in McElroy).
Plaintiffs’ claim that GMAC Corp. promised that it
would refinance Plaintiffs’ loans is merely an unfulfilled
promise regarding future actions.

Although Plaintiffs allege

that GMAC Corp. failed to disclose at the time of the loans that
it would deny refinancing based on the non-compliance with
environmental regulations, Plaintiffs do not allege that GMAC
Corp. knew at the time it allegedly promised it would refinance
Plaintiffs’ loans that it would deny refinancing or that GMAC
Corp. otherwise lacked the present intent to fulfill the alleged
promise to refinance.

As to Plaintiffs’ allegations that GMAC

Corp. failed to disclose that it knew other lenders would not
refinance Plaintiffs’ loans and that GMAC Corp. would sell
Plaintiffs’ loans, Plaintiffs do not allege that GMAC Corp. ever
represented that other lenders would refinance Plaintiffs’ loans
or that GMAC Corp. would permanently retain Plaintiffs’ loans.
Even if GMAC Corp. did predict refinancing by other lenders or a
long-term retention of the loans by GMAC Corp., erroneous future
predictions or expectations cannot support a fraud claim.

19

GMAC Corp. has carried its summary judgment burden by
showing that it is entitled to judgment was a matter of law on
Count III.

Plaintiffs did not respond to the Motion as to Count

III and therefore failed to carry their burden of establishing
that there is a triable issue as to Count III.

Under the

circumstances of this case, this Court FINDS that summary
judgment is appropriate and GRANTS Defendants’ Motion as to Count
III.
D.

Count V (Breach of Fiduciary Duty)
Count V alleges a breach of fiduciary duty claim

against GMAC Corp. and MERS.

[First Amended Complaint at ¶¶ 137-

45.]
This district court has recognized that:
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
20

not fiduciary in nature.”) (citation omitted).
McCarty v. GCP Mgmt., LLC, Civil No. 10-00133 JMS/KSC, 2010 WL
4812763, at *5 (D. Hawai`i Nov. 17, 2010).
GMAC Corp., as Plaintiffs’ lender, and MERS, as the
lender’s nominee, generally did not owe any fiduciary duties to
Plaintiffs.

Plaintiffs have not presented any evidence

suggesting that there is a triable issue of fact on the issue
whether Plaintiffs had a special relationship with GMAC Corp. or
MERS that resulted in the creation of a fiduciary duty.

As with

Counts I, II, and III, Defendants have carried their summary
judgment burden, and Plaintiffs have failed to carry their burden
because they did not respond to the Motion as to Count V.
Defendants’ Motion is therefore GRANTED as to Count V.
II.

Claims Addressed in Plaintiffs’ Opposition
A.

Count IV (UDAP)
Count IV alleges a UDAP claim against GMAC Corp.

[First Amended Complaint at ¶¶ 124-36.]

Plaintiffs allege that

GMAC Corp.’s conduct in connection with the “subject loan”
violated Haw. Rev. Stat. § 480-2(a), Haw. Rev. Stat. § 481A-3,
and/or Haw. Rev. Stat. Chapter 454M.

[Id. at ¶¶ 129, 133.]

Plaintiffs also allege that “the loan contract” is void pursuant
to Haw. Rev. Stat. § 480-12, and therefore Plaintiffs are
entitled to rescission.

[Id. at ¶ 134.]

21

All of the factual allegations that form the basis of
Count IV concern conduct and non-disclosures in the consummation
of Plaintiffs’ loans.

[Id. at ¶¶ 129.a.-h.]

Plaintiffs’ UDAP claim is also subject to a four-year
statute of limitations.

Haw. Rev. Stat. § 480-24(a).

The

limitations period began to run from the consummation of the loan
at issue in Count IV.

Although it is not clear which of

Plaintiffs’ loans is the loan at issue in Count IV, the four-year
limitations period expired as to each one before Plaintiffs filed
this action.

None of the tolling provisions in § 480-24(b)

apply.
For the same reasons as set forth regarding Counts I
and II, Defendants have carried their summary judgment burden of
establishing that Count IV appears time-barred.

Plaintiffs

therefore had the burden of establishing that equitable tolling
applied.

Plaintiffs have not presented any evidence that would

support a finding that fraudulent concealment, or any other
applicable equitable tolling doctrine apply to the alleged UDAPs
that occurred in connection with the loan consummation.

Although

Plaintiffs address Count IV in their memorandum in opposition,
Plaintiffs do not address the alleged UDAPs pled in the First
Amended Complaint.

Instead, Plaintiffs address “MERS’ creation,

and GMAC’s recording of the false Assignment[,]” which Plaintiffs
did not plead as alleged UDAP violations in Count IV.

22

Plaintiffs

therefore failed to carry their burden of establishing that there
is a triable issue of fact as to the alleged UDAPs in Count IV.
This Court therefore CONCLUDES that Count IV is timebarred and GRANTS Defendants’ Motion as to Count IV.
B.

Count VI (Unjust Enrichment)
Count VI alleges an unjust enrichment claim against

GMAC Corp.

[First Amended Complaint at ¶¶ 146-50.]
This district court has recognized that:
Claims for unjust enrichment and quantum
meruit derive from principles of equity and
quasi-contract. See Porter v. Hu, 168 P.3d 994,
1007 (Haw. 2007); Hiraga v. Baldonado, 96 Hawai`i
365, 31 P.3d 222, 229 (Haw. 2001). Hawai`i law
has approved “the principle, long-invoked in the
federal courts, that ‘equity has always acted only
when legal remedies were inadequate.’” Porter,
169 P.3d at 1007 (quoting Beacon Theatres, Inc. v.
Westover, 359 U.S. 500, 509, 79 S. Ct. 948, 3 L.
Ed. 2d 988 (1959)). The absence of an adequate
remedy at law, therefore, is the “necessary
prerequisite” to maintaining equitable claims.
Id. (quoting Bd. of Dirs. of the Ass’n of Apt.
Owners of Regency Tower Condo. Project v. Regency
Tower Venture, 2 Haw. App. 506, 635 P.2d 244, 249
(Haw. Ct. App. 1981)).
It is also well settled in federal courts
that equitable remedies are not available when an
express contract exists between the parties
concerning the same subject matter. See Klein v.
Arkoma Prod. Co., 73 F.3d 779, 786 (8th Cir.
1996); Paracor Fin. v. Gen. Elec. Capital Corp.,
96 F.3d 1151, 1167 (9th Cir. 1996); Gibbs-Brower
Int’l v. Kirchheimer Bros. Co., 611 F. Supp. 122,
127 (N.D. Ill. 1985); Gerlinger v. Amazon.com,
Inc., 311 F. Supp. 2d 838, 856 (N.D. Cal. 2004).
Hawai`i law has recently endorsed application of
this principle as well. See Porter, 169 P.3d at
1007. The purpose of the rule is to guard against
the use of equitable remedies to “distort a
negotiated arrangement by broadening the scope of
23

the contract.” Gibbs-Brower Int’l, 611 F. Supp.
at 127. Where the parties to a contract have
bargained for a particular set of rights and
obligations, all claims involving those express
rights and obligations properly lie in contract
law and not in equity.
AAA Hawaii, LLC v. Hawaii Ins. Consultants, Ltd., CV. No.
08-00299 DAE-BMK, 2008 WL 4907976, at *3 (D. Hawai`i Nov. 12,
2008).
There is no dispute Plaintiffs entered into loan
contracts with GMAC Corp., which included bargained for rights
and obligations.

Plaintiffs allege that they had “an implied

contract and warranty” with GMAC Corp.
to ensure that they understood all fees, rates,
payments and charges which would be paid to [GMAC
Corp.] or its successors in interest, to obtain
credit on Plaintiffs’ behalf, to not charge any
fees which are not related to the settlement of
the loan, and to disclose to Plaintiffs that the
loan products together would provide a 30-year
mortgage designed specifically with Plaintiffs
(sic) known personal financial information
required by [GMAC Corp.]
[First Amended Complaint at ¶ 147.]

All of the components of

this alleged implied contract and warranty are governed by the
written contracts between Plaintiffs and GMAC Corp.

As a matter

of law, Plaintiffs therefore cannot recover on an unjust
enrichment claim alleging the failure to fulfill these terms.
Defendants’ Motion is therefore GRANTED as to Count VI.
C.

Count VII (Slander of Title)
Count VII alleges a slander of title claim against all

24

Defendants.

It alleges that the Assignment transferring the

First Mortgage from MERS, as GMAC Corp.’s nominee, to GMACM is
void and therefore GMACM’s foreclosure is also void.

[First

Amended Complaint at ¶¶ 151-58.]
Plaintiffs were not parties to the Assignment and they
have not presented any evidence indicating that they were
intended beneficiaries of the Assignment.

Plaintiffs therefore

do not have standing to object to the Assignment.

See Velasco v.

Sec. Nat’l Mortg. Co., CV. No. 10-00239 DAE KSC, 2011 WL 4899935,
at *4 (D. Hawai`i Oct. 14, 2011) (footnote omitted) (citing
Livonia Property Holdings, L.L.C. v. 12840–12976 Farmington Road
Holdings, LLC, 717 F. Supp. 2d 724, 737 (E.D. Mich. 2010)
(holding that a plaintiff who was not and is not a party to any
assignments or Pooling and Servicing Agreement at issue “lacks
standing to challenge their validity or the parties’ compliance
with those contracts.”)).

Insofar as Plaintiffs do not have

standing to object to GMAC Corp.’s and MERS’s authority to enter
into the Assignment, Plaintiffs have not identified a triable
issue of fact as to the slander of title claim against GMAC Corp.
and MERS.

Plaintiffs therefore have not carried their burden in

opposing summary judgment on Count VII against GMAC Corp. and
MERS.
Although Plaintiffs do not have standing to object to
the Assignment in and of itself, Plaintiffs may establish a

25

slander of title claim based on wrongful foreclosure if they can
prove that GMACM’s lien and the foreclosure action was false or
otherwise improper.

See Johnson v. Ass’n of Apartment Owners of

Ke Aina Kai Townhomes, CIVIL NO. 06-00106 HG-KSC, 2006 U.S. Dist.
LEXIS 61106, at *27 (D. Haw. Aug. 25, 2006) (rejecting a slander
of title claim based on wrongful foreclosure because it was
undisputed that the defendant “had a statutory right to file a
lien and foreclosure action.

Plaintiffs cannot show that the

filing of the lien and foreclosure action was ‘false’ or improper
because it was sanctioned by existing law.”).

GMACM initiated

foreclosure proceedings based on its interest in the Property by
virtue of the Assignment.

The Assignment, however, is

inconsistent in its identification of the subject property.

The

first page identifies the subject property as 7012 Hawaii Kai
Drive 1007, Makawao, HI 96768.

[Knapman Decl., Exh. 5 at 1.]

The address of the Property, however, is 609 Loulu Way, Makawao,
HI 96768.

The second page of the Assignment refers to “all

beneficial interest under that certain mortgage dated December
09, 2005, executed by PHARAOH ORLANDO MARTIN, SINGLE, AND
KAREN RENEE NORTON, SINGLE, AS JOINT TENANTS, WITH FULL RIGHTS OF
SURVIVORSHIP, FOREVER, mortgagor, and recorded in Bureau of
Conveyances in Regular System Document Instrument No. 2005-265228
on December 29, 2005 . . . .”

[Id. at 2.]

That citation is to

the First Mortgage, which refers to the correct address of the

26

Property.

[Knapman Decl., Exh. 2 at 3.]

Although Count VII does

not expressly state that it is based upon the use of an incorrect
address in the Assignment, the First Amended Complaint does
allege that “[t]he Assignment does not identify the tax map key
number.”

[First Amended Complaint at ¶ 153.]

This is sufficient

to place GMACM on notice of Plaintiffs’ allegation that the
foreclosure was invalid because GMACM did not have a valid
interest in the Property due to a failure to adequately identify
the Property in the Assignment.
Under the circumstances of this case, including the
fact that Defendants have styled the instant Motion as a motion
for summary judgment presumably to try to avoid having to respond
to subsequent amended complaints and the fact that the parties
have not conducted any discovery, the Court FINDS that summary
judgment on this claim is not appropriate at this time.

GMACM

has not carried its summary judgment burden of establishing that
there is no genuine issue of material fact regarding the validity
of its interest in the Property and the propriety of the
foreclosure process.

To the extent that Plaintiffs’ claim

against GMACM in Count VII is based on any other theory,
Plaintiffs have failed to establish a genuine issue of material
fact for trial.
Defendants’ Motion is GRANTED as to the claims in Count
VII against GMAC Corp. and MERS.

27

As to GMACM, Defendants’ Motion

is DENIED WITHOUT PREJUDICE as to the portion of Plaintiffs’
claim in Count VII based on the failure to adequately identify
the Property in the Assignment.

To the extent that Plaintiffs’

claim against GMACM in Count VII is based on any other theory,
Defendants’ Motion is GRANTED.
D.

Count VIII (Claim for Injunctive Relief)
Count VIII alleges a claim for injunctive relief

against GMACM.

[First Amended Complaint at ¶¶ 159-64.]

Injunctive relief is a remedy, not an independent cause of
action.

See Caniadido v. MortgageIT, LLC, Civil No. 11-00078

JMS/BMK, 2011 WL 3837265, at *6 (D. Hawai`i Aug. 26, 2011) (some
citations omitted) (citing Jensen v. Quality Loan Serv. Corp.,
702 F. Supp. 2d 1183, 1201 (E.D. Cal. 2010) (“A request for
injunctive relief by itself does not state a cause of action.”)).
GMACM is therefore entitled to judgment as a matter of law on
Count VIII.
The Court GRANTS Defendants’ Motion as to Count VIII,
but the Court emphasizes that the remedy of injunctive relief may
ultimately be available to Plaintiffs if they are able to
successfully amend and prevail upon a substantive claim that
warrants the remedy of injunctive relief.
CONCLUSION
On the basis of the foregoing, Defendants’ Motion for
Summary Judgment, filed August 15, 2011, is HEREBY GRANTED IN
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PART AND DENIED IN PART.

Specifically, Defendants’ Motion is

DENIED WITHOUT PREJUDICE as to the portion of Plaintiffs’ slander
of title claim in Count VII against GMACM which is based on the
alleged failure to adequately identify the Property in the
Assignment.

The Court GRANTS Defendants’ Motion as to:

•Counts I, II, III, IV, V, VI, and VIII;
•the portion of Count VII alleging a slander of title claim
against GMAC Corp. and MERS; and
•the portion of Count VII alleging a claim against GMACM based on
any theory other than the failure to adequately identify the
Property in the Assignment.
Insofar as this Court has granted summary judgment to GMAC Corp.
and MERS as to all claims against them, this Court DIRECTS the
Clerk’s Office to terminate GMAC Corp. and MERS as parties in
this action.
IT IS SO ORDERED.
DATED AT HONOLULU, HAWAII, November 30, 2011.

29

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

PHARAOH ORLANDO MARTIN, ET AL. V. GMAC MORTGAGE CORPORATION. ET
AL; CIVIL NO. 11-00118 LEK-BMK; ORDER GRANTING IN PART AND
DENYING IN PART DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT

30