Wright et al v. Wells Fargo Bank, NA et al

Filing 45

ORDER GRANTING IN PART DEFENDANTS' MOTION FOR JUDGMENT ON THE PLEADINGS re 31 ; 36 - Signed by CHIEF JUDGE SUSAN OKI MOLLWAY on 7/19/12. -- " Judgment on the pleadings is granted in favor of all Defendants with respect to Co unts II, III, IV, V, and VI. With respect to Count I, judgment on the pleadings is granted in favor of Wells Fargo, Carrico, and the Chapman Law Corporation for the entirety of Count I. Judgment on the pleadings is granted to ASC with respect to the portion of Count I premised on the alleged invalidity of the assignment of the Wrights mortgage to U.S. Bank. The motion for judgment on the pleadings or for summary judgment is denied with respect to the remaining portion of Count I asserted against ASC." -- "....the court now extends the deadline to file an amended complaint to August 2, 2012, and consequently further extends the dispositive motion cutoff to August 23, 2012." -- " The Clerk of Court is directed to serve thi s order on all parties and to ensure that each pro se Plaintiff is served with a separate copy of this order." (emt, )CERTIFICATE OF SERVICEParticipants registered to receive electronic notifications rec eived this document electronically at the e-mail address listed on the Notice of Electronic Filing (NEF). Daneford Michael Wright and Ellareen Uilani Wright shall be served by first class mail at the address of record on July 20, 2012. Pursuant to the this order, plaintiff's shall each be served individually.

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
DANEFORD MICHAEL WRIGHT,
ELLAREEN UILANI WRIGHT,

)
)
)
)
Plaintiffs,
)
vs.
)
)
WELLS FARGO BANK, N.A.;
)
)
HEATHER CARRICO; AMERICA’S
SERVICING COMPANY; CLAY
)
)
CHAPMAN IWAMURA PULICE &
NERVELL, ATTORNEYS AT LAW, A )
)
LAW CORPORATION; DOE
)
DEFENDANTS 1-10; et al.,
)
)
Defendants.
_____________________________ )

CIVIL NO. 11-00212 SOM-RLP
ORDER GRANTING IN PART
DEFENDANTS’ MOTION FOR
JUDGMENT ON THE PLEADINGS.

ORDER GRANTING IN PART
DEFENDANTS’ MOTION FOR JUDGMENT ON THE PLEADINGS
I.

INTRODUCTION.
The present action relates to a residential mortgage

loan on property owed by Plaintiffs Daneford Michael Wright and
Ellareen Uilani Wright.

In related state court proceedings, U.S.

Bank National Association, As Trustee for the Structured Asset
Securities Corporation Mortgage Loan Trust 2006-NC1 (“U.S.
Bank”), is in the process of foreclosing on that mortgage.

A

Hawaii state court has recently granted U.S. Bank’s motion for
summary judgment and an interlocutory decree of foreclosure.
The Wrights filed a Chapter 13 bankruptcy petition.
The United States Bankruptcy Court for the District of Hawaii
granted U.S. Bank relief from the automatic stay.

In doing so,

the bankruptcy court rejected the Wrights’ contention that U.S.
Bank had no valid interest in the mortgage.
After filing their Chapter 13 petition, the Wrights,
proceeding pro se, filed the present action.

They argue, among

other things, that their mortgage was never properly assigned to
U.S. Bank.

Defendants Wells Fargo Bank, N.A. (“Wells Fargo”),

America’s Servicing Company (“ASC”), and Heather Carrico now move
for judgment on the pleadings on the grounds that the Wrights’
claims are barred by res judicata and the Wrights fail to state a
claim upon which relief can be granted.

In the alternative,

Defendants seek summary judgment on the ground that there are no
triable issues of material fact with respect to the validity of
the assignment.

Defendant Clay Chapman Iwamura Pulice & Nervell,

Attorneys at Law, A Law Corporation (“Chapman Law Corporation”)
has filed a substantive joinder in the motion.
The court grants Defendants’ motion for judgment on the
pleadings with respect to five of the Wrights’ six claims (Counts
II through VI) on the ground that those claims, which are
predicated on the alleged invalidity of the assignment of the
Wrights’ mortgage to U.S. Bank, are barred by the doctrine of res
judicata.

Relying on the Wrights’ failure to state a claim, the

court grants judgment on the pleadings with respect to the
remaining claim (Count I) as to all Defendants except ASC, and to
part of the claim in Count I against ASC.

2

The court denies

Defendants’ motion for judgment on the pleadings or summary
judgment with respect to only the portion of Count I asserted
against ASC and based on alleged misrepresentations unrelated to
the validity of the assignment.
II.

LEGAL STANDARDS.
A.

Judgment on the Pleadings.

Rule 12(c) of the Federal Rules of Civil Procedure
states, “After the pleadings are closed--but early enough not to
delay trial--a party may move for judgment on the pleadings.”
The standard governing a Rule 12(c) motion for judgment on the
pleadings is “functionally identical” to that governing a Rule
12(b)(6) motion.

United States ex rel. Caffaso v. Gen. Dynamics

C4 Sys., Inc., 637 F.3d 1047, 1054 n.4 (9th Cir. 2011).

For a

Rule 12(c) motion, the allegations of the nonmoving party are
accepted as true, while the allegations of the moving party that
have been denied are assumed to be false.

See Hal Roach Studios

v. Richard Feiner & Co., Inc., 896 F.2d 1542, 1550 (9th Cir.
1989).

A court evaluating a Rule 12(c) motion must construe

factual allegations in a complaint in the light most favorable to
the nonmoving party.
Cir. 2009).

Fleming v. Pickard, 581 F.3d 922, 925 (9th

“Judgment on the pleadings under Rule 12(c) is

proper when the moving party establishes on the face of the
pleadings that there is no material issue of fact and that the
moving party is entitled to judgment as a matter of law.”
3

Jensen

Family Farms, Inc. v. Monterey Bay Unified Air Pollution Control
Dist., 644 F.3d 934, 937 n.1 (9th Cir. 2011).
Generally, when matters outside the pleadings are
considered, a motion for judgment on the pleadings must be
considered as one for summary judgment under Rule 56 of the
Federal Rules of Civil Procedure.

See Fed. R. Civ. P. 12(d).

However, when adjudicating a Rule 12(c) motion, a court may
consider matters subject to judicial notice without converting
the motion to one for summary judgment.

See Heliotrope Gen.,

Inc. v. Ford Motor Co., 189 F.3d 971, 981 n.18 (9th Cir. 1999)
(“When considering a motion for judgment on the pleadings, this
court may consider facts that are contained in materials of which
the court may take judicial notice.” (quotation marks omitted)).
Accord Lacondeguy v. Adapa, 2011 WL 9572, at *2 (E.D. Cal. Jan.
3, 2011); Williams v. City of Antioch, 2010 WL 3632199, at *2
(N.D. Cal. Sept. 2, 2010).
B.

Summary Judgment.

Summary judgment shall be granted when “the movant
shows that there is no genuine dispute as to any material fact
and the movant is entitled to judgment as a matter of law.”
R. Civ. P. 56(a).

Fed.

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).

4

The burden initially falls on the moving party to
identify for the court “the 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.
Catrett, 477 U.S. 317, 323 (1986)); accord Miller v. Glenn Miller
Prods., Inc., 454 F.3d 975, 987 (9th Cir. 2006).

“A fact is

material if it could affect the outcome of the suit under the
governing substantive law.”

Miller, 454 F.3d at 987.

Only if the moving party meets its initial burden on a
summary judgment motion does the burden shift “to the nonmoving
party to establish, beyond the pleadings, that there is a genuine
issue for trial.”
III.

Id.

FACTUAL BACKGROUND.
On December 21, 2005, the Wrights entered into a

mortgage agreement secured by property on the island of Maui.
The mortgage document names New Century Mortgage Corporation
(“New Century”) as the mortgagee.

See Defs.’ Concise Statement

of Facts (“Defs.’ Facts”) at Ex. 1, ECF No. 33-3.

Defendant

America’s Servicing Company (“ASC”) is the loan servicer.
See Compl. ¶ 40, Apr. 4, 2011, ECF No. 1.

It is unclear from the

pleadings when ASC became the loan servicer.
The Wrights allege that the mortgage was transferred to
Lehman Brothers Bank, FSB, on or about March 22, 2006.

5

Id. ¶ 12.

On April 2, 2007, New Century allegedly filed for bankruptcy.
Id. ¶ 13.

The Wrights say that, on or about April 20, 2009, ASC

told them that their mortgage had been sold, id. ¶ 20; that ASC
would not accept any payment for the loan, id. ¶ 21; and that any
payment made would not be applied to their loan, id. ¶ 22.

On or

about April 20, 2009, ASC allegedly also told the Wrights that
Lehman Brothers owned the mortgage, and later, on April 28, 2009,
told the Wrights that U.S. Bank owned their mortgage.

Id.

¶¶ 19, 24.
The mortgage in issue was assigned to U.S. Bank through
a document signed on August 19, 2009, and recorded on
September 2, 2009.

See Defs.’ Facts at Ex. 3, ECF No. 33-5.

The

Wrights allege that the assignment contained false, deceptive,
and misleading representations.

Compl. ¶ 26.

The assignment was

allegedly drafted by Clay Chapman, an attorney at Defendant
Chapman Law Corporation.

Id.

The Wrights also allege that the

attorney who executed the assignment document for New Century,
Defendant Carrico, did not have the authority to execute that
document because New Century was already defunct.

Id. ¶ 27.

The

Wrights maintain that the assignment was therefore fraudulent.
Id. ¶¶ 28.
On December 23, 2009, U.S. Bank, represented by Chapman
Law Corporation, initiated a foreclosure action in state court.
Id. ¶¶ 33-34.

U.S. Bank moved for summary judgment and for an

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interlocutory decree of foreclosure.

According to Defendants,

the Wrights opposed the motion on the ground that U.S. Bank
lacked standing to foreclose on the property because the
assignment to U.S. Bank was void and invalid.

A state court

orally granted U.S. Bank’s motion on December 8, 2010.

Defs.’

Facts at Ex. 5, ECF No. 33-7.
On December 22, 2010, the Wrights filed a voluntary
petition for Chapter 13 bankruptcy in the United States
Bankruptcy Court for the District of Hawaii.
No. 33-8.

Id. at Ex. 6, ECF

In keeping with the automatic stay of all judicial

proceedings against a debtor under 11 U.S.C. § 362(a), the state
court did not issue a written order granting summary judgment and
the interlocutory decree of foreclosure.
On April 4, 2011, while both the bankruptcy and state
court actions were ongoing, the Wrights initiated the present
action in federal court.

Their complaint names Wells Fargo, ASC,

Carrico, and the Chapman Law Corporation as Defendants and
asserts six claims: (1) violations of Hawaii’s Unfair and
Deceptive Trade Practices Act; (2) violations of the federal Fair
Debt Collection Practices Act (“FDCPA”); (3) fraud; (4)
violations of the federal and state Racketeering Influenced and
Corrupt Organizations Acts (“RICO”); (5) “non-consensual lien”;
and (6) slander of title.

7

U.S. Bank sought relief from the automatic stay in the
bankruptcy court.

Id. at Ex. 9, ECF No. 33-11.

The Wrights

argued again that U.S. Bank lacked standing to participate
because the assignment to U.S. Bank was invalid.
Facts at Ex. 10, ECF No. 33-12.

The bankruptcy court granted

U.S. Bank’s motion on December 14, 2011.
ECF No. 33-13.

See Defs.’

Id. at Ex. 11,

Shortly thereafter, on January 10, 2012, the

state court issued findings of fact, conclusions of law, and an
order granting U.S. Bank’s motion for summary judgment and a
decree of foreclosure.

Id. at Ex. 18, ECF No. 33-20.

Defendants

say that the Wrights have filed a motion for relief from that
order.
In the bankruptcy proceedings, the Wrights objected to
U.S. Bank’s secured claim and requested that the court take
judicial notice of U.S. Bank’s lack of standing to submit a
secured claim given the alleged invalidity of the assignment to
U.S. Bank of the mortgage.
33-10.

See id. at Exs. 7,8, ECF Nos. 33-9,

Soon after it lifted the automatic stay, the bankruptcy

court rejected the Wrights’ argument as to U.S. Bank’s standing
and overruled the objection.

Id. at Exs. 13-14, ECF Nos. 33-15,

33-16.
Now before this court is a joint motion by all
Defendants except the Chapman Law Corporation seeking judgment on
the pleadings on the grounds that the Wrights’ claims are barred

8

by res judicata and the Wrights fail to state a claim for relief.
In the alternative, Defendants move for summary judgment.

The

Chapman Law Corporation has filed a substantive joinder in their
motion.

The Wrights did not file any written opposition, but

orally opposed the motion.
This court held a hearing on July 9, 2012.

Wells

Fargo, Carrico, ASC, and the Chapman Law Corporation were
represented by counsel.

Daneford Michael Wright, proceeding pro

se, appeared by phone and orally opposed the motion.

Ellareen

Uilani Wright was not present, either herself or through counsel.
IV.

ANALYSIS.
A.

Counts II, III, IV, V, and VI Are Barred by Res
Judicata.

Defendants argue that judgment on the pleadings is
warranted based on the doctrine of res judicata.

Defendants

point to the bankruptcy court’s rejection of the Wrights’ claims.
Defendants submit as exhibits to their motion various filings
from the bankruptcy action.

Defendants are presumably asking

this court to take judicial notice of those documents at least
with respect to the portion of their motion that seeks judgment
on the pleadings.

Having received no challenge to the

authenticity of these or any exhibits, this court takes judicial
notice of the bankruptcy court documents for purposes of this
order.

9

Res judicata “bars litigation in a subsequent action of
any claims that were raised or could have been raised in the
prior action.”

Owens v. Kaiser Found. Health Plan, Inc.,

244 F.3d 708, 713 (9th Cir. 2001) (citations omitted).

The Ninth

Circuit has explained:
The doctrine of res judicata provides that “a
final judgment on the merits bars further
claims by parties or their privies based on
the same cause of action.” The application
of this doctrine is “central to the purpose
for which civil courts have been established,
the conclusive resolution of disputes within
their jurisdiction.” Moreover, a rule
precluding parties from the contestation of
matters already fully and fairly litigated
“conserves judicial resources” and “fosters
reliance on judicial action by minimizing the
possibility of inconsistent decisions.”
Tahoe-Sierra Pres. Council, Inc. v. Tahoe Reg’l Planning Agency,
322 F.3d 1084, 1077 (9th Cir. 2003) (quoting United States ex
rel. Barajas v. Northrop Corp., 147 F.3d 905 (9th Cir. 1998)).
Res judicata applies only when there is “(1) an
identity of claims, (2) a final judgment on the merits, and (3)
privity between parties.”

Turtle Island Restoration Network v.

U.S. Dep’t of State, 673 F.3d 914, 917 (9th Cir. 2012) (quoting
Tahoe–Sierra Pres. Council, 322 F.3d at 1077).
1.

Identity of Claims.

The Ninth Circuit considers four factors when
determining whether there is an “identity of claims”:
“(1) whether rights or interests established in the prior

10

judgment would be destroyed or impaired by prosecution of the
second action; (2) whether substantially the same evidence is
presented in the two actions; (3) whether the two suits involve
infringement of the same right; and (4) whether the two suits
arise out of the same transactional nucleus of facts.”

Turtle

Island, 673 F.3d at 917 (quoting Costantini v. Trans World
Airlines, 681 F.2d 1199, 1201–02 (9th Cir. 1982)).
The four factors are “tools of analysis, not
requirements.”

Thus, all four factors need not be established.

The Ninth Circuit has found an identity of claims based solely on
the ground that the two claims in issue arose out of the same
transaction.

E.g., Turtle Island, 673 F.3d at 918-20 (analyzing

only the fourth factor because the two lawsuits in issue involved
“technically different legal challenges”); Int’l Union of
Operating Eng’rs-Emp’rs Constr. Indus. Pension, Welfare and
Training Trust Funds v. Karr, 994 F.2d 1426, 1430 (9th Cir. 1993)
(citing Western Sys., Inc. v. Ulloa, 958 F.2d 864, 871 (9th Cir.
1992); C.D. Anderson & Co., Inc., v. Lemos, 832 F.2d 1097, 1100
(9th Cir. 1987); Sidney v. Zah, 718 F.2d 1453, 1459 (9th Cir.
1983); and Derish v. San Mateo-Burlingame Bd. of Realtors, 724
F.2d 1347, 1349 (9th Cir. 1983), overruled on other grounds by
Eichman v. Fotomat Corp., 759 F.2d 1434, 1437 (9th Cir. 1985)).
Because “[t]he last of these criteria is the most
important,” id. at 918, this court focuses on the fourth factor,

11

which examines whether the two suits arise out of the same
transactional nucleus of facts.

See Owens, 244 F.3d at 714 (“The

central criterion in determining whether there is an identity of
claims between the first and second adjudications is whether the
two suits arise out of the same transactional nucleus of facts.”
(quoting Frank v. United Airlines, Inc., 216 F.3d 845, 851 (9th
Cir. 2000) (quotation marks omitted))).
“Whether two suits arise out of the same transactional
nucleus depends upon whether they are related to the same set of
facts and whether they could conveniently be tried together.”
Turtle Island, 673 F.3d at 918 (quoting ProShipLine Inc. v. Aspen
Infrastructures Ltd., 609 F.3d 960, 968 (9th Cir. 2010)).

The

inquiry is often “essentially the same as whether the claim could
have been brought in the first action.”

Id. (quoting United

States v. Liquidators of European Fed. Credit Bank, 630 F.3d
1139, 1151 (9th Cir. 2011)).

Although a plaintiff “need not

bring every possible claim,” “where claims arise from the same
factual circumstances, a plaintiff must bring all related claims
together or forfeit the opportunity to bring any omitted claim in
a subsequent proceeding.”

Id.

Defendants argue that all of the Wrights’ claims in
this action and the Wrights’ objection to U.S. Bank’s secured
claim in the bankruptcy proceeding arise out of the same
underlying transaction.

The court agrees with Defendants as to

12

Counts II (FDCPA), III (fraud), IV (RICO), V (non consensual
lien), and VI (slander of title).

Those claims are premised on

the Wrights’ allegation that the assignment of their mortgage to
U.S. Bank was invalid.
In the bankruptcy proceeding, the Wrights sought to
prevent U.S. Bank from foreclosing on their property by arguing
that U.S. Bank did not have a valid assignment of the mortgage.
The Wrights contended that the assignment documents were
fraudulent and had been “disingenuously manufactured for the
purpose of falsifying a non-judicial foreclosure.”
Facts at Ex. 8 at 2.
contentions.

See Defs.’

The bankruptcy court rejected those

See id. at Ex. 14, ECF No. 33-16.

Before this court, the Wrights are presently making the
very argument that the bankruptcy court rejected, i.e., that the
assignment was fraudulent.

See Compl. ¶ 28.

The remedy they now

seek is damages rather than a halt of the foreclosure action, but
their reasons remain the same.

In Count II, the Wrights assert

that Defendants violated the FDCPA by making false
representations in the assignment and by improperly executing the
assignment without a valid power of attorney.

Id. ¶¶ 49-52.

In

Count III, the Wrights assert that Defendants committed fraud by
making false representations in the assignment that they intended
the Wrights rely on.

Id. ¶¶ 59-60.

The Wrights assert in Count

IV that Defendants conspired to enforce the allegedly fraudulent

13

assignment.

Id. ¶¶ 65-66.

In Count V, the Wrights request an

order expunging the assignment as a “non consensual lien” and
urge that the assignment “be void and rescinded.”

Id. ¶¶ 71-72.

Finally, the Wrights assert in Count VI that Defendants greatly
limited their use and enjoyment of their property, depreciated
their interest in the property, and decreased the value of the
property by preparing and recording a “purported” assignment.
Id. ¶¶ 75-76
Res judicata bars these claims.

The bankruptcy court

has already determined that U.S. Bank properly acquired the
Wrights’ note and mortgage.

Although the Wrights cite different

laws and theories, Claims II, III, IV, V, and VI are premised on
the same transactional nucleus of facts as their objection in the
bankruptcy proceedings.

In both the present action and the

bankruptcy proceeding, the heart of the Wrights’ position was
that the assignment of the mortgage to U.S. Bank was invalid.
See Owens, 244 F.3d at 714 (applying res judicata to plaintiffs’
Title VII claims in light of a state court case in which they had
asserted wrongful termination and various state law breach
contract claims and noting that “[b]oth causes of action [were]
predicated on racial discrimination and allege[d] the same
circumstances regarding Appellants’ terminations”).
The Wrights could have opposed the request for relief
from the automatic stay or objected to U.S. Bank’s claim by

14

arguing that the assignment was invalid because (1) Defendants
did not have a valid power of attorney from New Century; (2) New
Century no longer existed when the assignment occurred; (3) the
power of attorney did not give any Defendant the power to assign
the mortgage to U.S. Bank; (4) the notary on the assignment
document was incomplete; and (5) Wells Fargo and the Chapman Law
Corporation violated Hawaii law.
The other three factors relating to whether there is an
identity of claims also weigh in Defendants’ favor.

With respect

to the first factor, a determination that the assignment in issue
is invalid might impair U.S. Bank’s interest in the subject
property even though that interest has already been established
by the bankruptcy court.

With respect to the second factor, to

determine whether the assignment is valid this court would look
to the same evidence reviewed by the bankruptcy court: the
documents establishing a chain of title.

As to the third factor,

the two actions at least indirectly involve the infringement of
U.S. Bank’s right to ownership of the mortgage.

There is thus an

identity of claims in this case and the bankruptcy action.
2.

Final Judgment on the Merits.

For a bankruptcy order to have preclusive effect the
bankruptcy court must have issued a final judgment on the merits.
See Davis v. Yageo Corp., 481 F.3d 661, 680 (9th Cir. 2007);
Siegel v. Federal Home Loan Mortg. Corp., 143 F.3d 525, 528-29

15

(9th Cir. 1998).

“[A] bankruptcy court’s allowance or

disallowance of a claim is a final judgment.”

Siegel, 143 F.3d

at 529 (citing United States v. Coast Wineries, 131 F.2d 643, 648
(9th Cir. 1942)).

The bankruptcy court need not enter a separate

order allowing the claim.

Id.

Outside the context of res judicata, the Ninth Circuit
has stated that a “bankruptcy court order is final and thus
appealable where it 1) resolves and seriously affects substantive
rights and 2) finally determines the discrete issue to which it
is addressed.”

In re AFI Holding, Inc., 530 F.3d 832, 836 (9th

Cir. 2008) (quoting In re Lazar, 237 F.3d 967, 985 (9th Cir.
2001)).
The bankruptcy court’s orders granting U.S. Bank’s
motion for relief from the automatic stay and overruling the
Wrights’ objection to U.S. Bank’s secured claim are final
judgments on the merits.

Those orders finally determined that

U.S. Bank had standing to assert a secured claim because it was
the holder of the note, and concluded, based on the record, that
the note and mortgage appeared to have been properly transferred
into the trust that U.S. Bank was serving as trustee for.
Facts at Ex. 14.

Defs.’

See In re Prestige Ltd. Partnership-Concord,

234 F.3d 1108, 1113-14 (9th Cir. 2000) (holding that a district
court order overruling a debtor’s objections to a lender’s claim
was final and appealable); In re Conejo Enterprises, Inc., 96

16

F.3d 346, 351 (9th Cir. 1996) (“The decision of a bankruptcy
court granting or denying relief from an automatic stay . . . is
a final decision reviewable by this court.” (citations omitted)).
3.

Privity Between the Parties.

Although Defendants were not parties to the bankruptcy
action, they are in privity with U.S. Bank.

“‘Privity’ . . . is

a legal conclusion ‘designating a person so identified in
interest with a party to former litigation that he represents
precisely the same right in respect to the subject matter
involved.’”

Headwaters Inc. v. U.S. Forest Service, 399 F.3d

1047, 1052-53 (9th Cir. 2005) (quoting In re Schimmels, 127 F.3d
875, 881 (9th Cir. 1997)).

“Privity, traditionally, arose from a

limited number of legal relationships in which two parties have
identical or transferred rights with respect to a particular
legal interest . . . .”

Id. at 1053.

ASC is the loan servicer for the loan and mortgage in
issue.

“[A] mortgage servicer acts as the agent of the mortgagee

to effect collection of payments on the mortgage loan.”

R.G.

Fin. Corp. v. Vergara–Nunez, 446 F.3d 178, 187 (1st Cir. 2006).
For purposes of matters relating to the validity of the
assignment to U.S. Bank, ASC, as U.S. Bank’s agent, is in privity
with U.S. Bank.

See Wolverton v. MorgageIt, Inc., 2011 WL

5117573, at *3 (D. Nev. Oct. 24, 2011).

17

Wells Fargo is also in privity with U.S. Bank because
Wells Fargo is being sued only in its capacity as the corporation
that owns and controls ASC.

Plaintiffs seek to impute ASC’s acts

to Wells Fargo.
Heather Carrico is in privity with U.S. Bank because
she is being sued for having signed the assignment in her
capacity as Wells Fargo’s Vice President of Loan Documentation.
See Adams v. Cal. Dep’t of Health Servs., 487 F.3d 684, 691–92
(9th Cir. 2007) (holding that agents and employees of the
defendant in the first action were in privity with that defendant
for purposes of res judicata).
The Chapman Law Corporation is also in privity with
U.S. Bank for purposes of the validity of the assignment.

The

Chapman Law Corporation represented U.S. Bank in the bankruptcy
action, and it is being sued for its role in drafting and
executing the assignment on behalf of U.S. Bank.

See id.

See

also Montana v. United States, 440 U.S. 147, 154 (1979) (holding
that res judicata may apply to nonparties who “assume control
over litigation in which they have a direct financial or
proprietary interest”).
The doctrine of res judicata precludes the Wrights from
proceeding against Defendants with respect to Counts II, III, IV,
V, and VI.

18

B.

Count I Fails to State a Claim for Relief Against
Wells Fargo, Carrico, and the Chapman Law
Corporation, and States Only a Limited Claim
Against ASC.

Defendants argue that Count I is also barred by res
judicata.

The court agrees with respect to most, but not all, of

Count I.
Count I asserts a violation of chapter 480 of Hawaii
Revised Statutes.

Section 480-2 states:

“Unfair methods of

competition and unfair or deceptive acts or practices in the
conduct of any trade or commerce are unlawful.”
The only unfair and deceptive acts attributed to Wells
Fargo, Carrico, and the Chapman Law Corporation concern the
allegedly fraudulent assignment and alleged misrepresentations
regarding ownership of the mortgage.

As explained above, the

Wrights are barred from arguing that the assignment in issue was
improper, as that issue was addressed by the bankruptcy court.
Nor do the Wrights identify any false statement made by Wells
Fargo, Carrico, or the Chapman Law Corporation in any other
regard, such as about ownership of the mortgage.
Even without the res judicata bar, Count I would be
deficient as asserted against Wells Fargo, Carrico, and the
Chapman Law Corporation.

Rule 9(b) of the Federal Rules of Civil

Procedure requires a plaintiff to plead allegations of fraudulent
misrepresentations with particularity.

See Smallwood v. NCsoft

Corp., 730 F. Supp. 2d 1213, 1232-33 (D. Haw. 2010) (regarding
19

pleading requirements for chapter 480).

See also Vess v. Ciba-

Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003) (regarding
pleading requirements when part of a claim is based on
allegations of fraud).
That leaves the portion of Count I asserting a claim
against ASC.

To the extent that portion concerns the alleged

invalidity of the assignment to U.S. Bank, the court grants
summary judgment to ASC.

However, the Wrights also allege that

ASC engaged in unfair and deceptive trade practices in servicing
the mortgage.

Id. ¶ 40.

They allege that ASC told them that ASC

would not accept any payment for the home loan, and that any
payment made would not be applied to their mortgage.

Id. ¶ 22.

ASC also allegedly withheld information about who actually owned
the mortgage.

Id. ¶¶ 19, 23.

These allegations do not rest on

the alleged invalidity of the assignment.
A deceptive act or practice under section 480–2 of
Hawaii Revised Statutes is “(1) a representation, omission, or
practice that (2) is likely to mislead consumers acting
reasonably under the circumstances where (3) the representation,
omission, or practice is material.”

Courbat v. Dahana Ranch,

Inc., 111 Haw. 254, 262, 141 P.3d 427, 435 (Haw. 2006) (citations
omitted).

“A representation, omission, or practice is considered

‘material’ if it involves information that is important to
consumers and, hence, likely to affect their choice of, or

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conduct regarding, a product.”
marks omitted).

Id. (citations and quotation

This test is “an objective one, turning on

whether the act or omission is likely to mislead consumers as to
information important to consumers in making a decision regarding
the product or service.”

Id. (citations omitted).

Identifying as deceptive ASC’s alleged representations
“that ASC would not accept payment for the loan” and “that if
they made payment it would not be applied to their mortgage,”
Compl. ¶¶ 21-22, the Wrights say ASC caused them to stop making
mortgage payments “with any confidence” and to breach their
mortgage agreement.

Id. ¶¶ 43-44.

Even taking into account the

heightened pleading requirements under Rule 9(b) of the Federal
Rules of Civil Procedure, the court concludes that the Wrights
sufficiently state a claim against ASC in the portion of Count I
that does not involve the validity of the assignment to U.S.
Bank.
To the extent the Wrights are attempting in Count I to
impute ASC’s alleged section 480-2 violation to Wells Fargo, they
fail to allege any facts warranting the piercing of the corporate
veil.

See Suzuki v. Castle and Cooke Resorts, 124 Haw. 230, 233,

239 P.3d 1280, 1284 (Haw. Ct. App. 2010) (listing factors
identified by the Hawaii Supreme Court as relevant to the
piercing of the corporate veil, such as commingled funds,
employment of the same people, identical ownership, shared

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directors, and officers with supervisory or managerial
responsibilities over both companies (citing Robert’s Hawaii
School Bus, Inc. v. Laupahoehoe Transp. Co., 91 Haw. 224, 241,
982 P.2d 853, 870 (Haw. 1999))).
Defendants argued at the hearing that, even if
sufficiently pled, the claim in Count I against ASC should fall
under the summary judgment standard.

The problem with this

argument is that Defendants do not meet their burden as the
movants of establishing the absence of triable issues with
respect to ASC’s alleged misrepresentations that are unrelated to
the assignment.

Indeed, the moving papers do not even mention

those alleged misrepresentations!
In sum, judgment on the pleadings is granted on Count I
to the extent it is asserted against Wells Fargo, Carrico, and
the Chapman Law Corporation.

Judgment on the pleadings is also

granted to ASC on the portion of Count I based on the assignment.
The motion is denied with respect to the part of Count I asserted
against ASC and unrelated to the assignment.
V.

CONCLUSION.
Judgment on the pleadings is granted in favor of all

Defendants with respect to Counts II, III, IV, V, and VI.

With

respect to Count I, judgment on the pleadings is granted in favor
of Wells Fargo, Carrico, and the Chapman Law Corporation for the
entirety of Count I.

Judgment on the pleadings is granted to ASC

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with respect to the portion of Count I premised on the alleged
invalidity of the assignment of the Wrights’ mortgage to U.S.
Bank.

The motion for judgment on the pleadings or for summary

judgment is denied with respect to the remaining portion of Count
I asserted against ASC.
At the hearing on this motion, the parties that were
present agreed to continue the trial date.
now December 11, 2012.

The new trial date is

Although Ellareen Uilani Wright did not

appear at the hearing, the new trial date also applies to her.
At the hearing, the parties also agreed to extend the
dispositive motions cutoff to August 2, 2012.

However, the court

failed to ask the parties whether they also agreed to extend the
deadline for filing an amended complaint.

In fairness to the

Wrights, the court now extends the deadline to file an amended
complaint to August 2, 2012, and consequently further extends the
dispositive motion cutoff to August 23, 2012.

A further

extension of the dispositive motions cutoff may be sought if
warranted by new claims.
Any amended pleading may not reassert the alleged
invalidity of the assignment to U.S. Bank.

The only claim that

may be repled is a claim alleging misrepresentations by
Defendants that are unrelated to the assignment.

The Wrights

need not file any amended complaint, and if they opt not to do so
by August 2, 2012, then the case will proceed only against ASC

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and only with respect to the portion of Count I unrelated to the
assignment.
The new deadlines to amend pleadings and to file
dispositive motions apply to all parties, including Ellareen
Uilani Wright.
The Clerk of Court is directed to serve this order on
all parties and to ensure that each pro se Plaintiff is served
with a separate copy of this order.

Daneford Michael Wright, not

being licensed to practice law in Hawaii, may not represent
Ellareen Uilani Wright.
IT IS SO ORDERED.
DATED: Honolulu, Hawaii, July 19, 2012.

/s/ Susan Oki Mollway
Susan Oki Mollway
Chief United States District Judge

Wright v. Wells Fargo Bank, N.A., et al.,; Civil No. 11-00212 SOM/KSC; ORDER

GRANTING IN PART DEFENDANTS’ MOTION FOR JUDGMENT ON THE PLEADINGS.

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