Doran et al v. Wells Fargo Bank, National Association et al

Filing 27

ORDER GRANTING DEFENDANT'S 5 MOTION TO DISMISS COMPLAINT FILED FEBRUARY 8, 2011: "Plaintiffs have until June 14, 2011 to file an amended complaint in accordance with this order. The Court CAUTIONS Plaintiffs that, if they fail to file their amended complaint by June 14, 2011, this Court will amend this order to dismiss all of Plaintiffs' claims with prejudice. IT IS SO ORDERED." Signed by District JUDGE LESLIE E. KOBAYASHI on May 31, 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
RICHARD A. DORAN AND PATRICIA )
R. DORAN,
)
)
Plaintiffs,
)
)
vs.
)
)
WELLS FARGO BANK, ET AL.,
)
)
Defendants.
)
_____________________________ )

CIVIL NO. 11-00132 LEK-BMK

ORDER GRANTING DEFENDANT’S MOTION TO
DISMISS COMPLAINT FILED FEBRUARY 8, 2011
Before the Court is Defendant Wells Fargo Bank,
National Association’s1 (“Defendant”) Motion to Dismiss Complaint
Filed February 8, 2011 (“Motion”), filed on March 9, 2011.
Plaintiffs Richard A. Doran and Patricia R. Doran (collectively
“Plaintiffs”) filed their memorandum in opposition on
March 31, 2011, and Defendant filed its reply on May 9, 2011.
Plaintiffs also filed a supplemental memorandum on May 20, 2011.
This matter came on for hearing on May 23, 2011.

Appearing on

behalf of Defendant was Audrey Yap, Esq., and appearing on behalf
of Plaintiffs was David Cain, Esq., by telephone.

After careful

consideration of the Motion, supporting and opposing memoranda,
and the arguments of counsel, Defendant’s Motion is HEREBY
GRANTED for the reasons set forth below.

1

Wells Fargo Bank, National Association, is also known as
Wells Fargo.

BACKGROUND
Plaintiffs, who were proceeding pro se at the time,
originally filed the instant action on February 8, 2011 in the
State of Hawai`i Circuit Court of the Second Circuit.

The

Complaint alleges that the subject property, 3360 Kua’au Place,
Kihei, Hawai`i 96753 (“the Property”), is Plaintiffs’ principal
residence.

[Complaint at ¶¶ 1-2, 5.]

According to the

Complaint, the Property is secured by two mortgages from
Defendant.

Plaintiffs began having difficulty making payments on

their first mortgage on or about October 2009, and then began
having difficulty making payments on their second mortgage on or
about March 2010.

Plaintiffs attempted to sell the Property, but

were unsuccessful.

[Id. at ¶¶ 6-8.]

Plaintiffs allege that they contacted Defendant and
they “were specifically encouraged to apply for a loan
modification[.]”

[Id. at ¶ 9.]

According to the Complaint, the

loan modification application process continued for eighteen
months without either a denial or notice that Plaintiffs may not
qualify.

[Id. at ¶¶ 10-11.]

Instead, Defendant directed

Plaintiffs to address “technicalities” and misplaced paperwork.
[Id. at ¶ 12.]

Plaintiffs state that they incurred costs in

preparing the application, including copying costs for required
documents.

[Id. at ¶ 13.]

Plaintiffs submitted “yet another

complete modification package” on September 9, 2010, [id. at ¶

2

14,] but a week later Defendant informed Plaintiffs that it could
not find the paperwork [id. at ¶ 15].
Plaintiffs inquired again about the status of their
loan modification application on September 17, 2010, and
Defendant responded that it had located Plaintiffs’ paperwork,
but that Plaintiffs’ file had been transferred to the short sale
department.

One of Defendant’s representatives claimed that

Plaintiffs cancelled their loan modification on
September 10, 2010.

Plaintiffs deny making such a request.

They

immediately informed Defendant that they still wanted to be
considered for loan modification.

[Id. at ¶¶ 16-19.]

Plaintiffs believe that there were some requests from
Defendant’s representatives, including the entity assisting
Defendant with the foreclosure and Defendant’s attorney, to
postpone the foreclosure auction.

Plaintiffs also made numerous

written requests to Defendant to continue the loan modification
process.

Defendant, however, went forward with the foreclosure

auction on or about September 17, 2010.

After the auction,

Defendant went forward with attempts to secure the Property.
[Id. at ¶¶ 20-25.]
Plaintiffs claim that, as a result of Defendant’s
conduct, they have incurred damages, including attorneys’ fees,
postage, and copying charges.

They also state that the

foreclosure was the primary reason that they filed personal

3

Chapter 7 bankruptcy.

The bankruptcy proceeding caused Mr. Doran

to have difficulty renewing his contractor’s license and forced
him to change careers, resulting in a substantial reduction in
his salary.

[Id. at ¶¶ 26-28.]

Plaintiffs allege that Defendant committed fraud
(“Count I”) by: encouraging them to apply for loan modification;
failing to properly process the modification application; and
foreclosing on the Property instead of considering the
modification application.

Plaintiffs assert that Defendant

benefitted from this process.

[Id. at ¶¶ 29-32.]

Plaintiffs next allege that Defendant committed unfair
and deceptive trade practices (“Count II”) in violation of the
Washington Consumer Protection Act, Wash. Rev. Code § 19.86, et
seq. (“Washington CPA”), by engaging in a practice of marketing
loan modifications, failing to properly process the applications,
and foreclosing on properties based on technicalities in the
applications.

Plaintiffs allege that they relied upon

Defendant’s promises of loan modification to Plaintiffs’
detriment and that Defendant has been unjustly enriched.

[Id. at

¶¶ 34-39.]
Plaintiffs next allege that Defendant committed
wrongful foreclosure (“Count III”) by inducing Plaintiffs to
apply for loan modification and falsely assuring Plaintiffs that
they qualified.

[Id. at ¶¶ 40-41.]

4

Plaintiffs also allege slander of title (“Count IV”),
slander of credit (“Count V”), intentional or negligent
infliction of emotional distress (“Count VI”), and loss of
consortium (“Count VII”).
Plaintiffs seek: an injunction against the transfer of
the Property to Defendant or to a third-party buyer; a
determination that Defendant’s actions violate Wash. Rev. Code
§ 19.86 and an award of punitive/treble damages and attorneys’
fees and costs pursuant to that provision; consequential damages;
attorneys’ fees and costs pursuant to any written agreement
binding Defendant; and any other appropriate relief.
Defendant removed the instant action on March 2, 2011
based on diversity jurisdiction.

[Notice of Removal, filed

3/2/11 (dkt. no. 1-1), at ¶ 5.]

The Complaint alleges that

Plaintiffs are Hawai`i residents, and the Notice of Removal
states that Defendant is a citizen of South Dakota with its main
office in South Dakota.
exceeds $75,000.00.
I.

Further, the amount in controversy

[Id. at ¶¶ 2-4.]

Motion
In the instant Motion, Defendant first points out that,

on April 6, 2005, Plaintiffs executed a promissory note (“First
Note”) and their first mortgage (“First Mortgage”) as Trustees
Under the Richard and Patricia Doran Family Trust Dated

5

November 4, 1991 (“the Trust”).2

The principal amount of the

First Note was $926,000.00, and the First Mortgage gave Defendant
a security interest in the Property.

Defendant subsequently

sold, assigned, and transferred its interest in the First Note
and First Mortgage to U.S. Bank N.A., as Successor Trustee to
Wachovia Bank N.A. for WFASC 2005-AR13 (“U.S. Bank”).

One of

Defendant’s divisions, Wells Fargo Home Mortgage, Inc., is and
was U.S. Bank’s servicing agent for the First Mortgage.

[Mem. in

Supp. of Motion at 1-2.]
On May 21, 2007, the Trust also executed another
promissory note (“Second Note”) and another mortgage (“Second
Mortgage”) in favor of Defendant.3

The principal amount of the

Second Note was $200,000.00, and the Second Mortgage gave
Defendant a security interest in the Property.

Defendant states

that, on or about October 1, 2009, the Trust defaulted under the
terms of the First Note and First Mortgage.

Defendant served a

2

The Mortgage between Richard A. Doran and Patricia R.
Doran, Trustees Under the Richard and Patricia Doran Family Trust
Dated November 4, 1991 as “Borrower” and Wells Fargo Bank, N.A.
as “Lender”, recorded on April 19, 2005 in the Bureau of
Conveyances as document number 2005-076070 (“First Mortgage”), is
attached to the Motion as Exhibit A to the Declaration of
Counsel.
3

The Mortgage between “Richard A. Doran and Patricia Ruth
Doran, Trustees Under the Richard and Patricia Doran Family Trust
Dated Nov -4 1991” as “Mortgagor” and Wells Fargo Bank, N.A. as
“Mortgagee”, recorded on July 24, 2007 in the Bureau of
Conveyances as document number 2007-131571 (“Second Mortgage”),
is attached to the Motion as Exhibit B to the Declaration of
Counsel.
6

Notice of Mortgagee’s Intention to Foreclose (“Foreclosure
Notice”) on the Trust on April 19, 2010.4

[Id. at 2-3.]

On or about May 7, 2010, Plaintiffs filed a voluntary
petition for Chapter 7 bankruptcy.

On July 7, 2010, U.S. Bank

filed a motion seeking relief from the automatic bankruptcy stay
to allow U.S. Bank to enforce its security interest in the
Property.

On August 2, 2010, the United States Bankruptcy Court

for the District of Hawai`i issued an order granting U.S. Bank
relief from the automatic stay.

At the September 17, 2010

foreclosure auction, U.S. Bank was the highest bidder for the
Property.

[Id. at 3.]
Defendant argues that Plaintiffs do not have standing

to pursue claims relating to the Property because the Trust held
the Property prior to the non-judicial foreclosure.

Plaintiffs

were not parties to either the First Mortgage or the Second
Mortgage.

Defendant therefore argues that the real party in

interest is the Trust.

Defendant also points out that a trustee

cannot represent a trust pro se.

Thus, even if Plaintiffs were

to amend the Complaint to name the Trust as the plaintiff, they
could not proceed pro se.

4

Exhibit C to the Declaration of Counsel is the Mortgagee’s
Affidavit of Foreclosure Sale Under Power of Sale, filed October
15, 2010 in the Bureau of Conveyances as document number
2010-156277 (“Foreclosure Affidavit”). The Foreclosure Affidavit
notes the service of the Foreclosure Notice on various persons
and entities, including Plaintiffs, in their capacities as
trustees. [Foreclosure Aff. at 2-3, Exh. C.]
7

Defendant argues that Plaintiffs have failed to state a
claim for fraud because they have failed to plead fraud with
particularity as required by Fed. R. Civ. P. 9(b).

Further, the

mere allegations that Defendant encouraged Plaintiffs to apply
for loan modification and falsely assured Plaintiffs that it
would consider modification do not state a claim because, as a
matter of law, an unfulfilled promise cannot support a fraud
claim because it is not a misrepresentation of an existing fact.
Further, Plaintiffs have not alleged that they detrimentally
relied on the allegedly fraudulent statements.
Defendant next argues that Plaintiffs fail to state a
claim for violation of the Washington CPA.

The Washington CPA

does not apply because Plaintiffs are citizens of Hawai`i, the
Property is located in Hawai`i, and the non-judicial foreclosure
took place in Hawai`i.
Defendant argues that Plaintiffs’ wrongful foreclosure
claim fails because there is no basis in law or fact to conclude
that the foreclosure was wrongful.

Defendant therefore urges the

Court to dismiss that claim with prejudice.
Defendant contends that Plaintiffs’ claim for slander
of title fails because: Plaintiffs admit that the Mortgages are
valid liens on the Property and that they defaulted on the loans;
Plaintiffs fail to identify any legal or procedural deficiencies
in the foreclosure; and Plaintiffs have not identified any

8

unprivileged, false, or malicious publications about Plaintiffs’
title.

Defendant argues that Hawai`i does not appear to have

recognized a claim for slander of credit.

The few jurisdictions

that have recognized the claim require proof that the defendant
made a false and defamatory publication about the plaintiff’s
credit.

Plaintiffs have not identified any false or defamatory

publication by Defendant.

Defendant argues that Plaintiffs

themselves caused any injury to their credit by filing for
bankruptcy and failing to pay their mortgage on time.
Defendant also argues that Plaintiffs’ intentional
infliction of emotional distress (“IIED”) claim fails because the
Complaint does not allege outrageous conduct.

Plaintiffs’

negligent infliction of emotional distress (“NIED”) claim fails
because the Complaint does not allege that Defendant has engaged
in negligent conduct, nor does the Complaint allege conduct that
would cause serious emotional distress as a matter of law.
Plaintiffs have not shown that Defendant owed Plaintiffs a duty
of care, nor does the Complaint establish a basis to impute a
duty of care on Defendant’s part.

Further, the emotional

distress from foreclosure is something that normally constituted
people can cope with, and therefore it cannot support an NIED
claim.
Finally, Defendant argues that Plaintiffs have failed
to state a claim for loss of consortium.

9

Loss of consortium is a

derivative claim, and all of Plaintiffs’ underlying tort claims
are without factual or legal basis.

Defendant therefore asks the

Court to dismiss the Complaint in its entirety.
II.

Plaintiffs’ Memorandum in Opposition
Plaintiffs retained counsel prior to filing their

opposition to the Motion (“Memorandum in Opposition”).

As to the

argument that Plaintiffs lack standing to bring suit in their
individual capacities, Plaintiffs contend that this argument is
moot in light of counsel’s appearance.

In the alternative, they

argue that the claims are personal in nature because, although
title to the Property is held in the Trust, Plaintiffs were
personally injured by Defendant’s conduct.

[Mem. in Opp., Decl.

of David W. Cain, at ¶¶ 3-6.]
As to the fraud, unfair and deceptive trade practices,
and wrongful foreclosure claims, Plaintiffs argue that Defendant
falsely assured them that they would qualify for loan
modification, but Defendant foreclosed instead.

Plaintiffs state

that they relied on these assurances to their detriment.
¶ 10.]

[Id. at

As to the slander of title claim, Plaintiffs allege that

Defendant has clouded title to the Property by foreclosing.

As

to the slander of credit claim, Plaintiffs assert that the
foreclosure process impaired their credit score and encouraged
them to file for bankruptcy.

[Id. at ¶¶ 11-12.]

As to the IIED

and loss of consortium claims, Plaintiffs allege that the loan

10

modification and foreclosure processes “caused them unreasonable
stress and impaired their society and services.”

[Id. at ¶ 13.]

Plaintiffs therefore argue that the allegations in the
Complaint are more than sufficient to survive a Fed. R. Civ. P.
12(b)(6) motion to dismiss.
Plaintiffs also included affidavits stating that each
of them was individually injured by Defendant’s conduct and that
each of them suffered damages as a result.

[Mem. in Opp., Aff.

of Richard A. Doran, Aff. of Patricia R. Doran.]
III. Defendant’s Reply
In its Reply, Defendant reiterates that, because
Plaintiffs are neither the owners of the Property nor the
borrowers on the mortgages, they lack standing to bring the
instant action.

The mere fact that they reside at the Property

is not enough to confer standing.

[Reply at 2.]

Defendant

argues that the Trust is the real party in interest or, at the
very least, the Trust is an indispensable party under Fed. R.
Civ. P. 19.

[Id. at 3 & n.2.]

Defendant argues that Plaintiff’s Complaint cannot
survive the dismissal standard because there are no factual
allegations to support Plaintiffs’ legal conclusions.

In

addition to reiterating their arguments from the Motion,
Defendant argues that, even if the Washington CPA applies, a
claim for unfair and deceptive trade practices must be pled with

11

the same particularity required under Fed. R. Civ. P. 9(b).

The

Complaint does not satisfy Rule 9(b).
IV.

The Court’s Questions
On May 16, 2011, this Court issued an Entering Order

setting forth questions for counsel to address at the hearing on
the Motion.

[Dkt. no. 22.]

The Court directed the parties to

address whether the judicial estoppel doctrine applied,
precluding the litigation of claims that Plaintiffs should have
identified as assets during their bankruptcy proceedings.
Plaintiffs filed a memorandum regarding the Court’s
questions on May 20, 2011 (“Plaintiffs’ 5/20/11 Response”).
[Dkt. no. 24.]

Plaintiffs argue that the claims alleged in the

instant case did not arise until Defendant erroneously closed
Plaintiffs’ loan modification application and foreclosed on the
Property.

Plaintiffs assert that these events did not occur

until September 2010, culminating in the foreclosure sale on
September 17, 2010.

Plaintiffs therefore assert that the claims

did not arise during the pendency of the bankruptcy proceedings,
and the judicial estoppel doctrine does not apply.
Defendant addressed the Court’s questions at the
hearing on the Motion.

Defendant emphasized that, even if

Plaintiffs were not aware of potential claims related to the
denial of loan modification when they filed their bankruptcy
petition, Plaintiffs had an ongoing duty to disclose potential

12

claims that arose during the course of the bankruptcy proceeding.
Further, Defendant argues that Plaintiffs were clearly aware, or
should have been aware, of the purported slander of credit claim
at the time they filed their bankruptcy petition or shortly
thereafter.

Thus, Plaintiffs are, at a minimum, precluded from

bringing their slander of credit claim in the instant case.
STANDARD
I.

Federal Rule of Civil Procedure 12(b)(6)
Fed. R. Civ. P. 12(b)(6) permits a motion to dismiss a

claim for “failure to state a claim upon which relief can be
granted[.]”
Under Rule 12(b)(6), review is generally
limited to the contents of the complaint.
Sprewell v. Golden State Warriors, 266 F.3d 979,
988 (9th Cir. 2001). If matters outside the
pleadings are considered, the Rule 12(b)(6) motion
is treated as one for summary judgment. See Keams
v. Tempe Tech. Inst., Inc., 110 F.3d 44, 46 (9th
Cir. 1997); Anderson v. Angelone, 86 F.3d 932, 934
(9th Cir. 1996). However, courts may “consider
certain materials-documents attached to the
complaint, documents incorporated by reference in
the complaint, or matters of judicial
notice-without converting the motion to dismiss
into a motion for summary judgment.” United
States v. Ritchie, 342 F.3d 903, 908 (9th Cir.
2003).
On a Rule 12(b)(6) motion to dismiss, all
allegations of material fact are taken as true and
construed in the light most favorable to the
nonmoving party. Fed’n of African Am. Contractors
v. City of Oakland, 96 F.3d 1204, 1207 (9th Cir.
1996). To survive a motion to dismiss, a
complaint must contain sufficient factual matter
to “state a claim to relief that is plausible on
its face.” Bell Atl. Corp. v. Twombly, 550 U.S.
544, 570, 127 S. Ct. 1955, 167 L. Ed. 2d 929
13

(2007). “A claim has facial plausibility when the
plaintiff pleads factual content that allows the
court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.”
Ashcroft v. Iqbal, --- U.S. ----, 129 S. Ct. 1937,
1949, 173 L. Ed. 2d 868 (2009). “Threadbare
recitals of the elements of a cause of action,
supported by mere conclusory statements, do not
suffice.” Id. (citing Twombly, 550 U.S. at 554,
127 S. Ct. 1955).
Hawaii Motorsports Inv., Inc. v. Clayton Group Servs., Inc., 693
F. Supp. 2d 1192, 1195-96 (D. Hawai`i 2010).
This Court, however, notes that the tenet that the
court must accept as true all of the allegations contained in the
complaint – “is inapplicable to legal conclusions.”
S. Ct. at 1949.

Iqbal, 129

Factual allegations that only permit the court

to infer “the mere possibility of misconduct” do not show that
the pleader is entitled to relief.

Id. at 1950.

“Dismissal without leave to amend is improper unless it
is clear that the complaint could not be saved by any amendment.”
Harris v. Amgen, Inc., 573 F.3d 728, 737 (9th Cir. 2009)
(citation and quotation marks omitted).
II.

Federal Rule of Civil Procedure 9(b)
Fed. R. Civ. P. 9(b) requires that “[i]n alleging fraud

or mistake, a party must state with particularity the
circumstances constituting fraud or mistake.”

Rule 9(b) requires

that a party make particularized allegations of the circumstances
constituting fraud.

See Sanford v. MemberWorks, Inc., 625 F.3d

550, 557-58 (9th Cir. 2010).
14

In order to sufficiently plead a fraud claim, the
plaintiffs “must allege the time, place, and content of the
fraudulent representation; conclusory allegations do not
suffice.”

Shroyer v. New Cingular Wireless Servs., Inc., 622

F.3d 1035, 1042 (9th Cir. 2010) (citation omitted).

“Malice,

intent, knowledge, and other conditions of a person’s mind may be
alleged generally.”

Fed. R. Civ. P. 9(b); see also Odom v.

Microsoft Corp., 486 F.3d 541, 554 (9th Cir. 2007) (en banc)
(“[T]he state of mind - or scienter - of the defendants may be
alleged generally.” (citation omitted)); Walling v. Beverly
Enters., 476 F.2d 393, 397 (9th Cir. 1973) (stating that Rule
9(b) “only requires the identification of the circumstances
constituting fraud so that the defendant can prepare an adequate
answer from the allegations” (citations omitted)).
A motion to dismiss for failure to plead with
particularity is “the functional equivalent of a motion to
dismiss under Rule 12(b)(6)[.]”

Vess v. Ciba-Geigy Corp. USA,

317 F.3d 1097, 1107 (9th Cir. 2003).

In considering a motion to

dismiss, the court is not deciding whether a claimant will
ultimately prevail but rather whether the claimant is entitled to
offer evidence to support the claims asserted.
at 563 n.8 (citation omitted).

15

Twombly, 550 U.S.

DISCUSSION
I.

Judicial Notice
At the outset, the Court notes that it may take

judicial notice, sua sponte, at any stage of a case.
Evid. 201(c), (f).

Fed. R.

The Court may take judicial notice of facts

that are “not subject to reasonable dispute in that it is . . .
capable of accurate and ready determination by resort to sources
whose accuracy cannot reasonably be questioned.”

Fed. R. Evid.

201(b).
The Court takes judicial notice of Plaintiffs’ First
Mortgage and Second Mortgage and the Foreclosure Affidavit.
[Motion, Decl. of Counsel, Exhs. A-C.]

The accuracy of

Defendant’s exhibits is readily determinable through sources
whose accuracy cannot reasonably be questioned.

Further,

mortgage agreements are public records and therefore may be the
subject of judicial notice.

See, e.g., Duarte v. Bank of Am.,

Civil No. 10-00372 JMS/BMK, 2011 WL 1399127, at *1 n.1 (D.
Hawai`i Apr. 12, 2011) (citation omitted); Sakugawa v.
Countrywide Bank F.S.B., Cv. No. 10-00503 DAE-KSC, 2011 WL
572528, at *1 n.4 (D. Hawai`i Feb. 14, 2011) (citation omitted).
The Court also takes judicial notice of the docket in
In re Doran, case number 10-01361, United States Bankruptcy
Court, District of Hawai`i (“Bankruptcy Court”), in general, and
the following documents in particular: (1) Plaintiffs’ Voluntary
16

Petition, filed May 7, 2010 (dkt. no. 1); and (2) the Discharge
of Debtor(s) issued by the Bankruptcy Court on August 25, 2010
(dkt. no. 30).

These documents are subject to judicial notice

because they are public records and the accuracy of the
Bankruptcy Court’s records cannot reasonably be questioned.

See

11 U.S.C. § 107(a) (“[A] paper filed in a case under this title
and the dockets of a bankruptcy court are public records[.]”);
see also Reusser v. Wachovia Bank, N.A., 525 F.3d 855, 857 n.1
(9th Cir. 2008) (“We take judicial notice of the bankruptcy court
order, because it is a matter of public record.” (citations
omitted)); Finley v. Rivas, CV 10-00421 DAE-KSC, 2010 WL 3001915,
at *2 n.2 (D. Hawai`i July 31, 2010) (“This court ‘may take
notice of proceedings in other courts, both within and without
the federal judicial system, if those proceedings have a direct
relation to matters at issue.’” (quoting United States ex rel.
Robinson Rancheria Citizens Council v. Borneo, Inc., 971 F.2d
244, 248 (9th Cir. 1992))).
II.

Judicial Estoppel
“Judicial estoppel is an equitable doctrine that

precludes a party from gaining an advantage by asserting one
position, and then later seeking an advantage by taking a clearly
inconsistent position.”

Hamilton v. State Farm Fire & Cas. Co.,

270 F.3d 778, 782 (9th Cir. 2001) (citations omitted).

Courts

invoke “judicial estoppel not only to prevent a party from

17

gaining an advantage by taking inconsistent positions, but also
because of ‘general consideration[s] of the orderly
administration of justice and regard for the dignity of judicial
proceedings,’ and to ‘protect against a litigant playing fast and
loose with the courts.’”

Id. (quoting Russell v. Rolfs, 893 F.2d

1033, 1037 (9th Cir. 1990)) (alteration in original).
Courts may consider three factors in deciding whether
to apply the doctrine of judicial estoppel:
First, a party’s later position must be clearly
inconsistent with its earlier position. Second,
. . . whether the party has succeeded in
persuading a court to accept that party’s earlier
position, so that judicial acceptance of an
inconsistent position in a later proceeding would
create the perception that either the first or the
second court was misled. . . . [T]hird[,] . . .
whether the party seeking to assert an
inconsistent position would derive an unfair
advantage or impose an unfair detriment on the
opposing party if not estopped.
New Hampshire v. Maine, 532 U.S. 742, 750-51 (2001) (citations
and internal quotation marks omitted); accord Hamilton, 270 F.3d
at 782-83.
The Ninth Circuit has applied judicial estoppel to
prevent plaintiffs from asserting claims that they failed to
disclose during earlier bankruptcy proceedings.

See, e.g.,

Hamilton, 270 F.3d at 784 (“This court has held that a debtor who
failed to disclose a pending claim as an asset in a bankruptcy
proceeding where debts were permanently discharged was estopped
from pursuing such claim in a subsequent proceeding.” (citation
18

omitted) (emphasis in original)); Hay v. First Interstate Bank of
Kalispell, N.A., 978 F.2d 555, 557 (9th Cir. 1992) (holding that
the failure to give notice of a potential cause of action in
bankruptcy schedules and disclosure statements estops the debtor
from prosecuting that cause of action).
Under 11 U.S.C. § 521(a)(1), debtors are required to
file a list of creditors and, unless the court orders otherwise,
a schedule of assets and liabilities.

“[T]he bankruptcy code

requires scheduling all assets, including ‘potential’ claims[,]”
and the “[f]ailure to list an asset or interest on the bankruptcy
schedules causes the debtor to be judicially estopped from
pursuing a claim to recover that interest after discharge.”
Holland & Knight, LLP v. Deatley, 357 Fed. Appx. 83, 84 (9th Cir.
2009) (citing Hamilton v. State Farm Fire & Casualty Co., 270
F.3d 778, 783, 785 (9th Cir. 2001)).

“The debtor’s duty to

disclose potential claims as assets does not end when the debtor
files schedules, but instead continues for the duration of the
bankruptcy proceeding.”

Hamilton, 270 F.3d at 785 (citations

omitted).
Plaintiffs filed for bankruptcy on May 7, 2010.

[In re

Doran, case no. 10-01361 (Bankr. D. Hawai`i), Voluntary Petition
(dkt. no. 1).]

The Bankruptcy Court issued the Discharge of

Debtor(s) on August 25, 2010.

[Id., (dkt. no. 30).]

By the time

Plaintiffs filed their Voluntary Petition, they were already

19

having difficulty making payments on both of the mortgages.
[Complaint at ¶ 7.]

In the Voluntary Petition, Plaintiffs did

not disclose any claims against Defendant as potential claims.
[In re Doran, Voluntary Petition, Schedule B, no. 21 (Other
contingent and unliquidated claims of every nature . . .).]
Plaintiffs did not file any amendments to Schedule B in the
course of the bankruptcy proceeding.

The judicial estoppel

doctrine would preclude Plaintiffs from pursuing any claims in
the instant case that they had knowledge of, but did not
disclose, during the bankruptcy proceeding.
F.3d at 784.

See Hamilton, 270

The Court now turns to the discretionary factors

that the United States Supreme Court outlined in New Hampshire v.
Maine.
First, to the extent that any of Plaintiffs’ current
claims against Defendant existed at the time of their bankruptcy
proceeding, Plaintiffs are clearly asserting an inconsistent
position regarding those claims.

Plaintiff failed to disclose

those claims as potential assets in the bankruptcy proceeding,
effectively denying the existence of such claims, but they are
now pursing the claims in the instant case.
Second, to the extent that any of Plaintiffs’ current
claims against Defendant existed at the time of their bankruptcy
proceeding, allowing Plaintiffs to litigate those claims now
would create the perception that Plaintiffs misled the Bankruptcy

20

Court because Plaintiffs represented to the Bankruptcy Court that
they had no such claims or potential claims.

Bankruptcy courts

rely on such disclosures in evaluating bankruptcy petitions.

See

Hamilton, 270 F.3d at 784.
Third, to the extent that any of Plaintiffs’ current
claims against Defendant existed at the time of their bankruptcy
proceeding, Plaintiffs will reap an unfair advantage and
Defendant will suffer an unfair hardship if the Court allows
Plaintiffs to pursue such claims.

Plaintiffs benefitted from the

automatic stay of the collection of their debuts and from the
discharge of their unsecured debts without disclosing their
potential claims against Defendant as an asset that could be
applied to some of their debts.

Defendant, or another entity it

was acting on behalf of, was faced with the hardship of trying to
collect upon the mortgages in spite of Plaintiffs’ bankruptcy.5
Thus, the judicial estoppel doctrine applies to any of
Plaintiffs’ claims in the instant case that existed at the time
of their bankruptcy proceeding.

Plaintiffs’ claims in the

instant case all arise from Defendant’s alleged failure to
properly consider Plaintiffs’ loan modification application and

5

The Court notes that U.S. Bank, the entity for which one
of Defendant’s division is and was the servicing agent for the
First Mortgage, obtained relief from the automatic bankruptcy
stay to exercise its rights and remedies with respect to the
Property. [In re Doran, Order Granting Relief from Stay, filed
8/2/10 (dkt. no. 27).]
21

the eventual foreclosure.

Plaintiffs’ represent that Defendant’s

refusal to consider their application did not occur until
September 2010, and the foreclosure sale occurred on
September 17, 2010.

[Pltfs.’ 5/20/11 Response at 3-4.]

This Court has reviewed Plaintiffs’ claims and finds
that all of them, with the exception of the slander of credit
claim, rely primarily upon Defendant’s actions culminating in the
foreclosure sale.

The foreclosure sale did not occur until after

the conclusion of the bankruptcy proceedings.

Thus, although

during the bankruptcy proceedings, Plaintiffs were clearly aware
of the possibility that Defendant could foreclose on the
Property, this Court cannot find that Plaintiffs had knowledge of
enough facts to know that these potential claims existed prior to
the discharge.

See Hamilton, 270 F.3d at 784 (explaining that a

plaintiff must have knowledge of enough facts to know that
potential claims exist at the time disclosure in bankruptcy is
required (citations omitted)); see also Hay, 978 F.2d at 557 (“We
recognize that all facts were not known to [the bankruptcy
petitioner] at that time, but enough was known to require
notification of the existence of the asset to the bankruptcy
court.” (citations omitted) (emphasis in original)).

The Court

therefore FINDS that Count I (fraud), Count II (violation of the
Washington CPA), Count III (wrongful foreclosure), Count IV
(slander of title), Count VI (infliction of emotional distress),

22

and Count VII (loss of consortium) are not subject to judicial
estoppel.
Count V (slander of credit) alleges that Defendant’s
actions impaired Plaintiffs’ credit, “causing them to lose the
ability to have good credit . . . .”

[Complaint at ¶ 47.]

Plaintiffs’ theory behind this claim is that Defendant’s
“foreclosure process impaired their credit score and encouraged
them to pursue bankruptcy relief.”
David W. Cain, at ¶ 12.]

[Mem. in Opp., Decl. of

By the time they filed their bankruptcy

petition, Plaintiffs were aware that Defendant had begun the
foreclosure process because Defendant served them with the
Foreclosure Notice in April 2010.

[Foreclosure Aff., Exh. C.]

Further, insofar as the slander of credit claim is based upon the
pursuit of bankruptcy relief as a result of the foreclosure
process, Plaintiffs were clearly aware, or should have been
aware, of the potential slander of credit claim when they filed
their bankruptcy petition.

The Court therefore FINDS that

Plaintiffs’ slander of credit claim is subject to judicial
estoppel.
Plaintiffs’ failure to disclose that claim at any point
during the bankruptcy proceeding precludes them from litigating
that claim in the instant case.

Further, no amendment to the

Complaint can cure this defect in the slander of credit claim.
Plaintiffs’ slander of credit claim is therefore DISMISSED WITH

23

PREJUDICE.

The Court emphasizes that it expresses no opinion as

to the viability of the slander of credit claim if Plaintiffs had
not been judicially estopped from litigating it.
III. Defendant’s Motion
The Court now turns to the arguments that Defendant
raised in its Motion.

Defendant argues that the Court should

dismiss the Complaint because: the Trust was the owner of the
Property and the borrower under the mortgages, and therefore
Plaintiffs lack standing to bring the claims in the Complaint;
and, even if the Trust is replaced as the plaintiff, the
Complaint fails to state a claim upon which relief can be
granted.
A.

Standing
Plaintiffs argue that, although the Trust was the owner

of the Property, the Property is Plaintiffs’ home and they have
personally suffered damages as a result of Defendant’s actions.
Article III standing exists only when the
plaintiff has suffered an injury-in-fact, i.e., an
“invasion of a legally protected interest” that is
“concrete and particularized.” Lujan v. Defenders
of Wildlife, 504 U.S. 555, 560 (1992). It is
well-settled that a plaintiff who is not a party
to a mortgage loan cannot assert a claim against
the lender for asserted violations of [the Real
Estate Settlement Procedures Act of 1974
(“RESPA”)] stemming from the loan settlement
process. See, e.g., Thomas v. Guild Mortg. Co.,
No. CV 09-2687-PHX-MHM, 2011 WL 676902, at *4 (D.
Ariz. Feb. 23, 2011) (granting summary judgment on
RESPA and [the Truth in Lending Act (“TILA”)]
claims for lack of standing because the plaintiff
was not a party to the mortgage, citing cases);
24

Cleveland v. Deutsche Bank Nat’l Trust Co., No.
08cv0802 JM(NLS), 2009 WL 250017 (S.D. Cal. Feb.
2, 2009) (dismissing TILA, RESPA, fraud, and other
claims of a plaintiff whose wife took out a
mortgage, reasoning that “someone who is not a
party to [a] contract has no standing to enforce
the contract or to recover extra-contract damages
for wrongful withholding of benefits to the
contracting party”).
Santiago v. Bismark Mortg. Co., Civil No. 10-00467 SOM/KSC, 2011
WL 839762, at *4 (D. Hawai`i Mar. 4, 2011) (some alterations in
original).
Plaintiffs, in their individual capacities, did not
hold the title to the Property and were not parties to the
mortgages.

Thus, the Trust, and not Plaintiffs, suffered any

injuries that allegedly resulted from Defendant’s failure to
modify the terms of the mortgage loans and from the foreclosure
sale of the Property.

Plaintiffs therefore lack the required

injury-in-fact to pursue any claims based on Defendant’s refusal
to modify the loans and foreclosure.

The Court will grant

Defendant’s Motion and dismiss those claims.

Plaintiffs,

however, can easily remedy this defect in the Complaint by
amending the Complaint to state that Plaintiffs are proceeding on
behalf of the Trust in their capacities as trustees.

This is

particularly so in light of the fact that, subsequent to the
filing of Defendant’s Motion, Plaintiffs retained counsel and are
no longer proceeding pro se.

Any dismissal for lack of standing

would therefore be without prejudice.

25

In addition, the Court notes that Plaintiffs do have
standing to pursue claims which allege injuries that they
individually suffered while acting on the Trust’s behalf in the
attempt to secure loan modification and prevent foreclosure.

The

Court now turns to the adequacy of each of Plaintiffs’ remaining
claims.
B.

Failure to State a Claim
1.

Count I - Fraud

Under Hawai`i law, the elements of a fraud 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)).
In the present case, Plaintiffs essentially base their
fraud claim on allegedly false statements that Defendant made to
induce Plaintiffs, on behalf of the Trust, to apply for loan
modification.

[Complaint at ¶ 30.]

For example, Plaintiffs

allege that Defendant falsely represented that they would qualify
for loan modification.

[Id. at ¶ 41 (alleging that Plaintiffs

applied for loan modification “under the assurance from
26

Wells Fargo that they qualified”).]

Plaintiffs also allege that

Defendant represented that it would consider Plaintiffs’
application for loan modification.

[Id. at ¶ 32.]

First, the

allegations of Plaintiffs’ fraud claim fail to meet the pleading
requirements of Fed. R. Civ. P. 9(b).

Plaintiffs merely made

conclusory allegations about the allegedly fraudulent statements
without setting forth the time, place, and content of the
allegedly fraudulent statements.

See Shroyer v. New Cingular

Wireless Servs., Inc., 622 F.3d 1035, 1042 (9th Cir. 2010).

This

Court must dismiss the fraud claim on this basis alone.
The Court also notes that, 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[.]”
Id. (citations and block quote format omitted) (emphasis in
original).

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

27

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).
In the present case, Plaintiffs’ allegation that
Defendant somehow promised Plaintiffs that they would qualify for
loan modification, or even that Defendant promised Plaintiffs
that it would consider their application, cannot support a
plausible fraud claim unless Plaintiffs can also allege that,
when Defendant made those promises, it never intended to fulfill
them.

Absent such a state of mind, the alleged representations

are only broken promises and not fraud.

The Complaint merely

alleges that Defendant foreclosed in spite of its prior
representations.

[Complaint at ¶ 32.]

The Complaint does not

allege, for example, that Defendant made those representations
knowing that it would not fulfill them and knowing that it would
foreclose.

The Court therefore FINDS that Plaintiffs have failed

to allege a plausible fraud claim.

It is arguably possible for

Plaintiffs to cure the defects in this claim if they can make
specific allegations according to the standards discussed supra.
Plaintiffs must also amend their Complaint to allege this claim
on behalf of the Trust because it is the Trust - the title holder
to the Property - that was allegedly injured by the failure to
grant, or even consider, the loan modification application.

28

The

Court therefore GRANTS Defendant’s Motion as to Count I and
DISMISSES Count I WITHOUT PREJUDICE.
2.

Count II - Unfair and Deceptive Trade Practices

Count II alleges unfair and deceptive trade practices
in violation of the Washington CPA.6

[Complaint at ¶¶ 33-39.]

Wash. Rev. Code § 19.86.020 states: “Unfair methods of
competition and unfair or deceptive acts or practices in the
conduct of any trade or commerce are hereby declared unlawful.”
Plaintiffs have not alleged any connection to
Washington in either the Complaint or their Memorandum in
Opposition.

The Property is located in Hawai`i; Plaintiffs, on

behalf of the Trust, executed the notes and mortgages in Hawai`i;
and Plaintiffs have not identified anything in the terms of those
documents which requires the application of the Washington CPA.
The Court FINDS that Plaintiffs have failed to state a plausible
claim for unfair and deceptive trade practices in violation of
the Washington CPA.

Further, there is no indication in the

record that Plaintiffs can cure the defects in this claim upon
amendment.

The Court therefore GRANTS Defendant’s Motion as to

Count II and DISMISSES Count II WITH PREJUDICE.
3.

Count III - Wrongful Foreclosure

Wrongful foreclosure is a state law claim.
6

See, e.g.,

The Court notes that Plaintiffs lack standing to pursue
this claim because the Trust was the holder of title to the
Property prior to the foreclosure sale.
29

Curiel v. Barclays Capital Real Estate Inc., Civ. No. S-09-3074
FCD/KJM, 2010 WL 729499, at *1 (E.D. Cal. Mar. 2, 2010).
Plaintiffs’ Complaint does do not state what specifically was
“wrongful” about the foreclosure, except that the foreclosure
happened while Plaintiffs were applying for loan modification and
while Defendant was assuring Plaintiffs that they qualified for
loan modification.

[Complaint at ¶ 41.]

Other cases in this district have asserted wrongful
foreclosure claims pursuant to Haw. Rev. Stat. Chapter 667.

See,

e.g., Rundgren v. Bank of New York Mellon, Civil No. 10–00252
JMS/LEK, 2011 WL 768800, at *9 (D. Hawai`i Feb. 28, 2011).

For

example, Haw Rev. Stat. § 667-5 sets forth procedural and notice
requirements for foreclosure under power of sale.

Plaintiffs

have failed to plead any specific factual allegations setting
forth the claimed defects in the foreclosure process.

The Court

therefore FINDS that Plaintiffs have failed to allege a plausible
claim for wrongful foreclosure.

It is arguably possible for

Plaintiffs to cure the defects in this claim, if they can
identify any actionable failures to follow the foreclosure
process.

Plaintiffs must also amend their Complaint to allege

this claim on behalf of the Trust because it is the Trust - the
title holder to the Property - that was allegedly injured by the
wrongful foreclosure.

The Court therefore GRANTS Defendant’s

Motion as to Count III and DISMISSES Count III WITHOUT PREJUDICE.

30

4.

Count IV - Slander of Title

Plaintiffs’ slander of title claim alleges that
Defendant impaired the title to the Property7 by recording
various documents, including the notice of the foreclosure sale.
[Complaint at ¶ 45.]
Slander of title is “a tortious injury to
property resulting from unprivileged, false,
malicious publication of disparaging statements
regarding the title to property owned by
plaintiff, to plaintiff’s damage.” Southcott v.
Pioneer Title Co., 203 Cal. App. 2d 673, 676, 21
Cal. Rptr. 917 (1962) (citations omitted). . . .
. . . . “To establish slander of title at
common law, a plaintiff must show falsity, malice,
and special damages, i.e., that the defendant
maliciously published false statements that
disparaged a plaintiff’s right in property,
causing special damages.” B & B Inv. Group v.
Gitler, 229 Mich. App. 1, 8, 581 N.W.2d 17, 20
(Mich. Ct. App. 1998).
Hawaii Motorsports Inv., Inc. v. Clayton Group Servs., Inc., CIV.
No. 09-00304 SOM/BMK, 2010 WL 3398553, at *12 (D. Hawai`i Aug.
27, 2010); see also, e.g., Thomas v. Takabayashi, No. 27553, 2006
WL 2707372, at *1 n.1 (Hawai`i Ct. App. Sept. 21, 2006) (stating
elements of “slander of title at common law” (quoting B & B Inv.
Group, 229 Mich. App. 1, 8, 581 N.W.2d 17, 20 (1998))).
First, the Complaint fails to allege the Defendant
engaged in the unprivileged, false, malicious publication of

7

The Court notes that Plaintiffs lack standing to pursue
this claim because the Trust was the holder of title to the
Property prior to the foreclosure sale.
31

disparaging statements regarding the title to Property.
Moreover, this district court has previously rejected a slander
of title claim based on an alleged 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.”

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. Hawai`i
Aug. 25, 2006).8

Similarly, in the instant case, Plaintiffs do

not deny that they defaulted on the mortgages - they only claim
that Defendant should have modified their mortgage loans.

Thus,

it is undisputed that Defendant’s foreclosure, under the terms of
the unmodified terms of the mortgages, was sanctioned by existing
law.
The Court FINDS that Plaintiffs have failed to state a
plausible claim for slander of title.

Further, there is no

indication in the record that Plaintiffs can cure the defects in
this claim upon amendment.

The Court therefore GRANTS

Defendant’s Motion as to Count IV and DISMISSES Count IV WITH
PREJUDICE.
5.

Count VI - Infliction of Emotional Distress

Count VI alleges both an IIED claim and an NIED claim.

8

Johnson is not available in Westlaw.
32

a.

IIED

Under Hawai`i law, there are four elements of an IIED
claim.

First, the plaintiff must prove that the conduct was

either intentional or reckless.
must have been “outrageous.”

Second, the conduct in question

Next, the plaintiff must establish

causation, and finally, there must be evidence that the plaintiff
suffered extreme emotional distress.

See Young v. Allstate Ins.

Co., 119 Hawai`i 403, 425, 198 P.3d 666, 688 (2008).

A

determination of “outrageous” conduct is fact specific.

Hawai`i

courts have defined outrageous conduct as conduct “‘without just
cause or excuse and beyond all bounds of decency.’”

Chin v.

Carpenter-Asui, No. 28654, 2010 WL 2543613, at *4 (Hawai`i Ct.
App. June 24, 2010) (quoting Lee v. Aiu, 85 Hawai`i 19, 34 n.12,
936 P.2d 655, 670 n.12 (1997) (some citations omitted)).

If a

plaintiff cannot prove that the alleged conduct rose to the level
of “outrageous,” dismissal is proper.

See Farmer ex rel. Keomalu

v. Hickam Fed. Credit Union, No. 27868, 2010 WL 466007, at *14
(Hawai`i Ct. App. Feb. 2, 2010) (citing Shoppe v. Gucci America
Inc., 94 Hawai`i 368, 387, 14 P.3d 1049, 1068 (2000)), cert.
denied, 2010 WL 2625261 (Hawai`i June 29, 2010).
This district court has recognized that:
“Default and foreclosure proceedings generally do
not rise to the level of extreme and outrageous
conduct. Denying a loan modification which might
result in foreclosure is no more ‘outrageous in
character’ than actually foreclosing.” Erickson
v. Long Beach Mortg. Co., No. 10–1423 MJP, 2011 WL
33

830727, at *7 (W.D. Wash. Mar. 2, 2011) (citation
omitted) (dismissing IIED claim on summary
judgment). But cf. Bass v. Ameriquest Mortg. Co.,
Civ. No. 09–00476 JMS–BMK, 2010 WL 3025167, at
*10–11 (D. Haw. Aug. 3, 2010) (denying summary
judgment as to an IIED claim where the plaintiff
asserted that the defendant “forged her signature
on the 2006 loans, refused to honor [her] right of
cancellation of the loans when she discovered the
forgeries, and commenced foreclosure proceedings
against [her] when she failed to make her loan
payments”).
Uy v. Wells Fargo Bank, N.A., Civ. No. 10–00204 ACK–RLP, 2011 WL
1235590, at *14 (D. Hawai`i Mar. 28, 2011) (alterations in Uy).
In the instant case, the Complaint essentially asserts
that Defendant’s conduct during the loan modification application
process and the eventual foreclosure constitutes “outrageous”
conduct.

The mere denial of loan modification and the

foreclosure itself do not rise to the level of outrageous conduct
sufficient to allege an IIED claim.

See id.

The Court

recognizes that Plaintiffs have raised factual allegations of
certain conduct by Defendant in the course of the loan
modification application process that is separable from the
actual denial of loan modification.

For example, Plaintiffs

allege that Defendant misplaced their loan modification paperwork
and erroneously transferred their modification file to the short
sale department.

[Complaint at ¶¶ 15-17.]

Even if these, and

other similar actions alleged in the Complaint, were without just
cause or excuse, they do not rise to the level of actions that
are “beyond all bounds of decency.”
34

See Chin, 2010 WL 2543613,

at *4 (citations and quotation marks omitted).

Plaintiffs’ IIED

claim does not allege “outrageous” conduct sufficient to raise an
IIED claim.

The Court therefore FINDS that Plaintiffs have

failed to allege a plausible claim for IIED.
It is, however, arguably possible for Plaintiffs to
cure the defects in this claim if they can identify any
outrageous conduct by Defendant.

Further, it may also be

possible for Plaintiffs to amend the Complaint to allege
outrageous conduct by Defendant which caused them to personally
experience extreme emotional distress, even though Plaintiffs
experienced the conduct while acting on behalf of the Trust.
Thus, if Plaintiffs can meet these requirements in the amended
complaint, they would have standing to pursue the IIED claims
individually.
the Trust.

They cannot, assert the IIED claim on behalf of

See, e.g., Caso v. Hartford Cas. Ins. Co., No. CIV.

S-07-101 FCD DAD, 2008 WL 1970024, at *4 n.9 (E.D. Cal. May 2,
2008); Reva Int’l, Ltd. v. MBraun, Inc., No.
03:06-CV-00306-LRH-VPC, 2007 WL 4592216, at *10 (D. Nev. Dec. 28,
2007); Unionamerica Ins. Co. v. Gen. Star Indem. Co., No.
A01-0317-CV (HRH), 2005 WL 757386, at *9 (D. Alaska Mar. 7,
2005).9

9

The Court therefore GRANTS Defendant’s Motion as to the

The Court
accepted rule of
case stating the
the Intermediate

notes that, although this appears to be a widely
law, the Court was not able to find any Hawai`i
same rule. In Kim v. Pacific Guardian Center,
Court of Appeals (“ICA”) affirmed the circuit
(continued...)
35

portion of Count VI alleging an IIED claim and DISMISSES the IIED
claim WITHOUT PREJUDICE.
b.

NIED

Under Hawai`i law, the elements of a NIED claim are:
(1) that the defendant engaged in negligent
conduct; (2) that the plaintiff suffered serious
emotional distress; and (3) that such negligent
conduct of the defendant was a legal cause of the
serious emotional distress. Tran v. State Farm
Mut. Automobile Ins. Co., 999 F. Supp. 1369, 1375
(D. Haw. 1998). A cognizable claim for NIED under
Hawaii law also “requires physical injury to
either a person or property,” see Calleon v.
Miyagi, 76 Haw. 310, 320, 876 F.2d 1278 (1994), or
a mental illness, see Haw. Rev. Stat. § 663-8.9.
Dowkin v. Honolulu Police Dep’t, Civ. No. 10-00087 SOM-LEK, 2010
WL 4961135, at *9 (D. Hawai`i Nov. 30, 2010).

Duty and breach of

duty are essential elements of a negligence claim under Hawai`i
law.

See Cho v. Hawai`i, 115 Hawai`i 373, 379 n.11, 168 P.3d 17,

23 n.11 (2007) (“It is well-established that, in order for a
plaintiff to prevail on a negligence claim, the plaintiff is

9

(...continued)
court’s ruling that “a corporate entity cannot suffer emotional
distress as a matter of law.” No. 27430, 2006 WL 2724095, at *4,
*6 (Hawai`i Ct. App. Sept. 21, 2006). The ICA, however, based
its holding upon the failure to meet the requirement that
“‘damages for emotional distress will only be recoverable where
the parties specifically provide for them in the contract or
where the nature of the contract clearly indicates that such
damages are within the parties’ contemplation or expectation in
the event of a breach.’” Id. at *6 (quoting Francis v. Lee
Enters., Inc., 89 Hawai‘i 234, 244, 971 P.2d 707, 717 (1999)).
This holding in Francis, however, related to claims for emotional
distress damages in breach of contract actions. 89 Hawai`i at
240, 971 P.2d at 713.
36

required to prove all four of the necessary elements of
negligence: (1) duty; (2) breach of duty; (3) causation; and (4)
damages.”).
This district court has recognized that:
[L]enders generally owe no duty of care sounding
in negligence to their borrowers. See, e.g.,
Champlaie v. BAC Home Loans Servicing, LP, 706 F.
Supp. 2d 1029, 1061 (E.D. Cal. 2009) (“[A]s a
matter of law, [a] lender [does] not owe a duty in
negligence not to place borrowers in a loan even
where there was a foreseeable risk borrowers would
be unable to repay.”) (citing Wagner v. Benson,
161 Cal. Rptr. 516, 521 (Cal. App. 1980) (finding
that a lender has no duty to ensure that borrower
will use borrowed money wisely)); Nymark [v. Heart
Fed. Sav. & Loan Ass’n], 283 Cal. Rptr. [53,] 56
[(Cal. App. 1991)] (similar).
McCarty v. GCP Mgmt., LLC, Civil No. 10-00133 JMS/KSC, 2010 WL
4812763, *6 (D. Hawai`i Nov. 17, 2010) (some alterations in
original).
Even though the present case involves Plaintiffs’
unsuccessful attempts to secure loan modification and not the
origination of the loans, Plaintiffs, acting on behalf of their
Trust, only dealt with Defendant in a borrower and lender
capacity.

This Court therefore FINDS that Plaintiffs have not,

and cannot, allege that Defendant owed them a duty of care
sounding in negligence.

Plaintiffs’ Complaint fails to allege a

plausible NIED claim, and they cannot cure the defects in that
claim by any amendment.

The Court therefore GRANTS Defendant’s

Motion as to the portion of Count V alleging an NIED claim and

37

DISMISSES the NIED Claim WITH PREJUDICE.
6.

Count VII - Loss of Consortium

Under Hawai`i law, loss of consortium is a derivative
action based on the damages sustained by the injured spouse.
Brown v. KFC Nat’l Mgmt. Co., 82 Hawai`i 226, 241, 921 P.2d 146,
161 (1996).

Loss of consortium claims, however, are “only

derivative in the sense that [they do] not arise unless one’s
spouse has sustained a personal injury.

The loss of consortium

claim is a claim for damages independent and separate from the
spouse’s claim for damages.”

Id. (citations and quotation marks

omitted) (alteration in original).

Insofar as Plaintiffs’

Complaint fails to allege claims that survive the instant Motion,
the Court must also dismiss Plaintiffs’ loss of consortium claim.
It is arguably possible for Plaintiffs to cure the defects in
this claim if they can amend the IIED claim, or allege new
personal claims pursuant to the requirements of Fed. R. Civ. P.
15(a).

The Court therefore GRANTS Defendant’s Motion as to Count

VII and DISMISSES Count VII WITHOUT PREJUDICE.
CONCLUSION
On the basis of the foregoing, Defendant’s Motion to
Dismiss Complaint Filed February 8, 2011, filed on March 9, 2011,
is HEREBY GRANTED.

Plaintiffs’ Complaint is HEREBY DISMISSED

WITH PREJUDICE as to: Count II - unfair and deceptive trade
practices in violation of the Washington Consumer Protection Act;
38

Count IV - slander of title; Count V - slander of credit; and the
portion of Count VI alleging an NIED claim.

Plaintiffs’

Complaint is HEREBY DISMISSED WITHOUT PREJUDICE as to: Count I fraud; Count III - wrongful foreclosure; the portion of Count VI
alleging an IIED claim; and Count VII - loss of consortium.

If

Plaintiffs choose to file an amended complaint, they must allege
Counts I and III on behalf of the Trust.
Plaintiffs have until June 14, 2011 to file an amended
complaint in accordance with this order.

The Court CAUTIONS

Plaintiffs that, if they fail to file their amended complaint by
June 14, 2011, this Court will amend this order to dismiss all of
Plaintiffs’ claims with prejudice.
IT IS SO ORDERED.
DATED AT HONOLULU, HAWAII, May 31, 2011.

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

RICHARD A. DORAN, ET AL. V. WELLS FARGO BANK, ET AL.; CIVIL NO.
11-00132 LEK-BMK; ORDER GRANTING DEFENDANT’S MOTION TO DISMISS
COMPLAINT FILED FEBRUARY 8, 2011

39