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

Filing 60

ORDER GRANTING DEFENDANT AMERICA SERVICING COMPANY'S MOTION FOR SUMMARY JUDGMENT re 46 - Signed by CHIEF JUDGE SUSAN OKI MOLLWAY on 12/20/12. " The court grants ASC's motion for summary judgment. Because this orde r disposes of all matters remaining in this case, the Clerk of Court is directed to close this case and to enter judgment for Defendants." (emt, )CERTIFICATE OF SERVICEParticipants registered to receive electronic notifications received this document electronically at the e-mail address listed on the Notice of Electronic Filing (NEF). Daneford Michael Wright and Ellareen Uilani Wright served by first class mail at the address of record on December 20, 2012.

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
DANEFORD MICHAEL WRIGHT, ET
AL.,

)
)
)
Plaintiffs,
)
)
vs.
)
)
WELLS FARGO BANK, ET AL.,
)
)
)
Defendants.
_____________________________ )

Civ. No. 11-00212 SOM/KSC
ORDER GRANTING DEFENDANT
AMERICA SERVICING COMPANY’S
MOTION FOR SUMMARY JUDGMENT

ORDER GRANTING DEFENDANT AMERICA SERVICING COMPANY’S
MOTION FOR SUMMARY JUDGMENT
I.

INTRODUCTION.
Plaintiffs Daneford Michael Wright and Ellareen Uilani

Wright are suing various defendants, including Wells Fargo Bank
dba America’s Servicing Company (“ASC”), in connection with a
residential mortgage loan.

This court previously granted

Defendants’ motion for judgment on the pleadings on all of the
Wrights’ claims except a portion of one claim against ASC.

ASC

now moves for summary judgment on the Wrights’ remaining claim in
this case.
II.

The court grants the motion.
BACKGROUND.
On December 21, 2005, the Wrights obtained a

residential mortgage loan from New Century Mortgage Corporation
(“New Century”).

Compl. ¶ 11, ECF No. 1.

At the loan closing,

the Wrights signed a Servicing Disclosure Form that said that the
right to collect their mortgage loan payments could be

transferred to a loan servicer.
ECF No. 47-4.

See Servicing Disclosure Form,

On June 1, 2006, ASC became the loan servicer.

Decl. of Denise Brennan (“Brennan Decl.”)¶ 3, ECF No. 47.

On

June 13, 2006, ASC notified the Wrights that it had become the
servicer and instructed the Wrights to send all future payments
to ASC.

See June 13, 2006 Letter, ECF No. 47-2.
The Wrights regularly paid ASC their monthly loan

payments through October 2008, but submitted their November 2008
mortgage payment two weeks late, then missed their December and
January payments.

Brennan Decl. ¶¶ 10-11.

On January 18, 2009,

ASC sent the Wrights a default notice, informing them that
“[u]nless the payments on your loan can be brought current by
February 17, 2009, it will become necessary to accelerate your
Mortgage Note.”

Letter dated Jan. 18, 2009, ECF No. 47-6.

The Wrights brought their loan current by the February
deadline, but missed their March and April payments.
Decl. ¶ 14.

Brennan

On April 19, 2009, ASC sent the Wrights a second

default notice, informing them that “[u]nless the payments on
your loan can be brought current by May 19, 2009, it will become
necessary to accelerate your Mortgage Note.”
Letter, ECF No. 47-7.
their loan current.

See April 19, 2009

On April 30, 2009, the Wrights brought

Brennan Decl. ¶ 22.

payment the Wrights submitted to ASC.

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This was the last loan

Id.

Meanwhile, the Wrights sent letters to their
congressional representatives explaining their financial
difficulties and inquiring about assistance in possibly
refinancing their loan.

See Brennan Decl. ¶¶ 18-22, 29-30.

The

Wrights’ congressional representatives forwarded these letters,
with the Wrights’ permission, to ASC.

Id.

Reacting to those

letters, ASC informed the Wrights that, although ASC had
considered the Wrights for a loan modification, it turned out
they were ineligible.
10.

See Letter dated June 5, 2009, ECF No. 47-

ASC advised the Wrights that, given their financial

difficulties, they might want to consider a short sale.

Id.

“Thereafter, ASC continued to work with Plaintiffs to arrange a
possible short sale of their property.

Plaintiffs told ASC that

they were planning to list the property with [a realtor] and
authorized ASC to release information to her in order to
facilitate the sale.”

Brennan Decl. ¶ 26.

The Wrights, however,

were unable to find a buyer for the property.

Email dated Sept.

1, 2010, ECF No. 47-12.
On June 21, 2009, ASC sent the Wrights a third notice
of default, again informing them that “[u]nless the payments on
your loan can be brought current by July 21, 2009, it will become
necessary to accelerate your Mortgage Note.”
21, 2009, ECF No. 47-11.

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Letter dated June

On December 23, 2009, U.S. Bank filed a foreclosure
complaint in state court.

On December 8, 2010, the state court

orally granted summary judgment and an interlocutory decree of
foreclosure to U.S. Bank on the Wright property.

The Wrights

filed a voluntary Chapter 13 Petition on December 22, 2010.
No. 47-15.

ECF

In keeping with the automatic stay triggered by all

bankruptcy proceedings against a debtor under 11 U.S.C. § 362(a),
the state court did not issue a written order.
On April 4, 2011, while both the bankruptcy case and
the state-court action were pending, the Wrights filed the
present action with this court.

ECF No. 1.

Their complaint

named multiple defendants, including Wells Fargo and ASC, and
asserted six claims: (1) violations of Hawaii’s Unfair and
Deceptive Trade Practices Act (“UDAP claim”); (2) violations of
the federal Fair Debt Collection Practices Act; (3) fraud; (4)
violations of the federal Racketeering Influenced and Corrupt
Organizations Act and state law; (5) “non-consensual lien”; and
(6) slander of title.

Id.

This court granted Defendants’ motion

for judgment on the pleadings with respect to five of the
Wrights’ six claims “on the ground that those claims, which
[were] predicated on the alleged invalidity of the assignment of
the Wrights’ mortgage to U.S. Bank, are barred by the doctrine of
res judicata.”

Order at 2, ECF No. 45.

The court denied the

motion for either judgment on the pleadings or summary judgment,
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however, with respect to a portion of the Wrights’ UDAP claim
against ASC.

Explaining why this portion of the Wrights’ UDAP

claim survived, the court noted:
[T]he Wrights also allege that ASC engaged in
unfair and deceptive trade practices in
servicing the mortgage. 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. ASC also allegedly withheld
information about who actually owned the
mortgage. These allegations do not rest on
the alleged invalidity of the assignment.
. . . .
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, the Wrights say ASC caused them to
stop making mortgage payments with any
confidence and to breach their mortgage
agreement. 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 . . .
that does not involve the validity of the
assignment to U.S. Bank.
Id. at 20-21(citing Compl. ¶¶ 19, 22-22, 23, 40, 43-44 (quotation
marks omitted).

Although Defendants had argued at the hearing on

their earlier motion that they were entitled to summary judgment
on this portion of the Wrights’ UDAP claim, the court noted that
Defendants had failed to establish “the absence of triable issues
with respect to ASC’s alleged misrepresentations that are

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unrelated to the assignment.”

Id. at 22 (“Indeed, the moving

papers do not even mention those alleged misrepresentations!”).
Now before this court is a new motion by ASC seeking
summary judgment on the remaining portion of the Wrights’ UDAP
claim (the “Motion”).

ECF No. 46.

ASC now argues that (1) the

Wrights are judicially estopped from bringing this lawsuit
because they failed to disclose their claims against ASC in their
Chapter 13 Petition, and (2) the Wrights’ UDAP claim fails as a
matter of law.
Approximately three weeks after ASC filed the Motion,
the Wrights filed a voluntary Chapter 7 Petition listing a
“potential claim” against ASC.
No. 1.

See Br. Pet. 12-01834 at 14, ECF

The Wrights assessed the “Current Value of Debtor’s

Interest in Property” as “0.00.”

Id.

In its Reply, ASC

complained that the Wrights’ new Chapter 7 filing did not cure
the Wrights’ earlier failure to disclose their claims against
ASC.1

Reply at 5-7, ECF No. 56.

1

ASC also raises the issue of whether the Wrights have
standing to bring the instant action in light of their new
Chapter 7 filing. Reply at 5 fn.2. Given the federal statutory
claims in this case, this court had subject matter jurisdiction
over this case from the outset. The court therefore had the
discretion to exercise supplemental jurisdiction over state-law
claims. 28 U.S.C. § 1367. The “standing” issue that ASC raises
goes to whether the Wrights satisfy statutory prerequisites for
bringing their claims, not to “standing” relating to subject
matter jurisdiction. The court cannot proceed to address the
merits of a claim brought by a party that lacks constitutional
standing. Such a claim would not be a “case or controversy,” as
required by Article III of the Constitution. However, statutory
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III.

STANDARD OF REVIEW.
Summary judgment shall be granted when “the pleadings,

the discovery and disclosure materials on file, and any
affidavits show that there is no genuine issue as to any material
fact and that the movant is entitled to judgment as a matter of
law.”

Fed. R. Civ. P. 56(c).

One of the principal purposes of

summary judgment is to identify and dispose of factually
unsupported claims and defenses.
U.S. 317, 323-24 (1986).

Celotex Corp. v. Catrett, 477

Accordingly, “[o]nly admissible

evidence may be considered in deciding a motion for summary
judgment.”

Miller v. Glenn Miller Prods., Inc., 454 F.3d 975,

988 (9th Cir. 2006).

Summary judgment must be granted against a

party that fails to demonstrate facts to establish what will be
an essential element at trial.

See Celotex, 477 U.S. at 323.

A

moving party has both the initial burden of production and the
ultimate burden of persuasion on a motion for summary judgment.
Nissan Fire & Marine Ins. Co. v. Fritz Cos., 210 F.3d 1099, 1102
(9th Cir. 2000).

The burden initially falls on the moving party

to identify for the court “those portions of the materials on
file that it believes demonstrate the absence of any genuine

“standing” is not to be confused with constitutional standing.
ASC raises its statutory “standing” issue for the first time in
its reply memorandum because the Chapter 7 Petition had not been
filed at the time ASC filed its Motion. Given the granting of
the Motion on other grounds, the court need not address the
statutory standing issue.
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issue of material fact.”

T.W. Elec. Serv., Inc. v. Pac. Elec.

Contractors Ass’n, 809 F.2d 626, 630 (9th Cir. 1987) (citing
Celotex Corp., 477 U.S. at 323); accord Miller, 454 F.3d at 987.
“A fact is material if it could affect the outcome of the suit
under the governing substantive law.”

Miller, 454 F.3d at 987.

When the moving party fails to carry its initial burden
of production, “the nonmoving party has no obligation to produce
anything.”

In such a case, the nonmoving party may defeat the

motion for summary judgment without producing anything.
Fire, 210 F.3d at 1102-03.

Nissan

On the other hand, when the moving

party meets its initial burden on a summary judgment motion, the
“burden then shifts to the nonmoving party to establish, beyond
the pleadings, that there is a genuine issue for trial.”
454 F.3d at 987.

Miller,

This means that the nonmoving party “must do

more than simply show that there is some metaphysical doubt as to
the material facts.”

Matsushita Elec. Indus. Co. v. Zenith Radio

Corp., 475 U.S. 574, 586 (1986) (footnote omitted).

The

nonmoving party may not rely on the mere allegations in the
pleadings and instead “must set forth specific facts showing that
there is a genuine issue for trial.”

Porter v. Cal. Dep’t of

Corr., 419 F.3d 885, 891 (9th Cir. 2005) (quoting Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 256 (1986)).

“A genuine

dispute arises if the evidence is such that a reasonable jury
could return a verdict for the nonmoving party.”

8

California v.

Campbell, 319 F.3d 1161, 1166 (9th Cir. 2003); Addisu v. Fred
Meyer, Inc., 198 F.3d 1130, 1134 (9th Cir. 2000) (“There must be
enough doubt for a ‘reasonable trier of fact’ to find for
plaintiffs in order to defeat the summary judgment motion.”).
On a summary judgment motion, “the nonmoving party’s
evidence is to be believed, and all justifiable inferences are to
be drawn in that party’s favor.”

Miller, 454 F.3d at 988

(quotations and brackets omitted).
IV.

ANALYSIS.
A.

Judicial Estoppel.

ASC urges the court to rule that the Wrights are
judicially estopped from bringing their claim against ASC.
Motion at 7-12; Reply at 3-7.

In invoking the doctrine of

judicial estoppel, ASC points to the Wrights’ failure to disclose
their claims against ASC in their Chapter 13 bankruptcy
schedules.

Motion at 7-12.

The Wrights’ Chapter 13 Petition

noted vaguely that the Wrights might have a “potential lawsuit
against U.S. Bank” with an “unknown” current value.
10.

Motion at

ASC also argues that judicial estoppel should apply because

there is no evidence that the Wrights made any attempt to comply
with their continuing obligation as debtors to disclose potential
claims and assets throughout their bankruptcy proceedings.
9-10.

Id.

In response, the Wrights argue, “This Federal case is

clearly reported correctly to the bankruptcy court and trustee.”
9

Opp’n at 4, ECF No. 54.

In its Reply, ASC argues that the

Wrights’ second bankruptcy petition does not cure their alleged
earlier failure to disclose.

Reply at 5-7.

“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).

The United States Supreme

Court identifies three factors applicable to a determination as
to whether an issue is judicially estopped:
First, a party’s later position must be
clearly inconsistent with its earlier
position. Second, courts regularly inquire
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. Absent
success in a prior proceeding, a party’s
later inconsistent position introduces no
risk of inconsistent court determinations,
and thus poses little threat to judicial
integrity. A third consideration is 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 (2001) (internal
citations and quotations omitted).
Viewing the record in the light most favorable to the
Wrights, the court cannot say that the Wrights’ earlier Chapter
13 Petition is “clearly inconsistent” with their position in the
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instant lawsuit.

See New Hampshire, 532 U.S. at 750.

There is

no dispute that the Wrights listed a “[p]otential lawsuit against
U.S. Bank” valued at an “[u]nknown” amount when they filed their
Chapter 13 Petition.

See B.R. 10-03893, Dkt. No. 15 at 5 of 32.

While ASC complains that the Wrights “failed to disclose their
claims against ASC” in their Petition, Motion at 7, none of the
cases ASC cites supports the proposition that the Wrights were
obligated to provide greater detail than they did.

Rather, all

of the cases that ASC relies on involve debtors that made no
mention at all of existing claims as potential assets.

The

Wrights’ failure to detail their claims is distinguishable from
total silence on the matter.

By noting the “[p]otential lawsuit”

in their Chapter 13 Petition, the Wrights gave notice of a
lawsuit that, once filed, would become a matter of public record.
Of course, ASC is correct in saying that the Wrights
should have updated their Chapter 13 Petition when they filed
this lawsuit.

See Hamilton v. State Farm Fire & Cas. Co., 270

F.3d 778, 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 proceedings.”).

But viewing the record in the light

most favorable to the Wrights, the court concludes that the
record does not establish that the Wrights adopted a “clearly
inconsistent” position by filing this lawsuit and failing to

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update their Chapter 13 Petition.
se.

The Wrights are proceeding pro

While ignorance of the law is no excuse, the Wrights’

Chapter 7 Petition, filed shortly after ASC had complained about
the Wrights’ shortcomings in this regard, suggests that the
Wrights were trying in good faith to comply with their
obligations to notify the Bankruptcy Court of this action.
ASC also complains that, among other things, the
Wrights’ Chapter 7 Petition listed the value of this case as
“0.00," although the Complaint listed the amount in controversy
as greater than $75,000.

Reply at 7.

ASC says, “The

characterization of an active lawsuit valued at over $75,000 as a
‘potential claim’ worth $0 is far from a full and accurate
disclosure.”

Id.

ASC overlooks the timing of the Wrights’

reference to a value of “0.00."

The Wrights provided that value

in response to an instruction to list the “Current Value of
Debtor’s Interest in Property.”
52 (emphasis added).

BR 12-01834, Dkt. No. 1 at 13 of

The Wrights, not having been awarded

anything in this lawsuit, appear to have been trying to
acknowledge that fact.
ASC, as the movant, has the burden of showing that
there is no triable factual issue.

ASC’s judicial estoppel

argument does not succeed in doing that.

First, it remains

unclear whether the Wrights’ Chapter 7 filing is “clearly
inconsistent” with their position in the present lawsuit.

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See New Hampshire, 532 U.S. at 750.

Second, this court has not

been presented with any instance in which the Wrights have
succeeded in having a court accept any earlier position.

Third,

given the court’s ruling on the merits of the UDAP claim, the
Wrights are deriving no unfair advantage and not imposing an
unfair detriment on ASC.

Accordingly, the court declines to

grant ASC summary judgment on the ground that the Wrights’
lawsuit is barred by judicial estoppel.
B.

UDAP Claim.

The Wrights’ sole remaining claim in this case is that
ASC “engaged in unfair or deceptive trade practices” in violation
of Hawaii’s UDAP law.
ECF No. 45.

See Compl. at ¶¶ 19, 22, 23; Order at 23,

ASC argues that it is entitled to summary judgment

on this claim because the Wrights have “failed to identify any
practice that is unfair or deceptive and have failed to establish
actual damages suffered as a result of ASC’s alleged conduct.”
Motion at 13.
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 (2006) (citations
omitted).

“A representation, omission, or practice is considered

13

‘material’ if it involves information that is important to
consumers and, hence, likely to affect their choice of, or
conduct regarding, a product.”
marks omitted).

Id.

(citations and quotation

The 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).

The Wrights have two allegations that remain in issue.
First, the Wrights allege that they repeatedly tried to discover
“who actually owned their mortgage, which ASC refused to reveal.”
Compl. ¶ 19.

Second, the Wrights allege that an ASC

representative refused to accept a mortgage payment and informed
the Wrights that if they made a payment it would not be applied
to their loan.

Id. ¶¶ 21-22.

With regard to ASC’s alleged failure to disclose the
owner of the Wrights’ loan, there is no evidence that ASC’s
alleged conduct was either misleading or material.

It is

undisputed that ASC was the loan servicer, and the Wrights were
consistently informed that all payments and correspondence
regarding their loan should be directed to ASC.

It is also

undisputed that ASC did in fact disclose that U.S. Bank owned the
Wrights’ loan on April 28, 2009.

Compl. ¶ 24, ECF No. 1.

It is

not clear how any alleged delay in disclosing this information
was either misleading or material, especially as the Wrights do

14

not show that ASC had an affirmative duty to disclose this
information.

See, e.g., Skaggs v. HSBC Bank, 2011 WL 3861373, at

*16 (D. Haw. Aug. 31, 2011).

Finally, the Wrights have not

provided any admissible evidence indicating that they suffered
damages because of this alleged delay.
The Wrights also allege that “[o]n or about April 20,
2009, ASC represented to Plaintiffs that ASC would not accept
payment for the loan” and that ASC “represented to Plaintiffs
that if they made payment it would not be applied to their
mortgage.”

Compl. ¶ 22.

According to Mr. Wright, this

conversation took place when he was two months behind on his
loan, and the ASC representative informed him that any partial
payment would be placed in a separate account and not applied to
his loan until his payment was fully current.
28, 2010, ECF No. 47-12.

Email dated June

The Wrights point to no evidence that

the ASC representative’s position during this phone call violated
or inaccurately reflected the terms of the Wrights’ mortgage.
See Mortgage Agreement, ECF No. 47-5 (providing that the Lender
may accept partial payments insufficient to bring the loan
current, “but Lender is not obligated to apply such payments . .
. until Borrower makes payment to bring the Loan current”).

A

statement that accurately and fairly represents the terms and
conditions of a mortgage agreement are not “unfair” or
“deceptive” under section 480-2.

15

The court therefore grants ASC summary judgment on the
remaining portion of the Wrights’ UDAP claim.
V.

CONCLUSION.

The court grants ASC’s motion for summary judgment.
Because this order disposes of all matters remaining in this
case, the Clerk of Court is directed to close this case and to
enter judgment for Defendants.
IT IS SO ORDERED.
DATED: Honolulu, December_ 20_, 2012.

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

Daneford Michael Wright, et al. v. Wells Fargo Bank, et al., Civ No. 11-00212 SOM/KSC;
ORDER GRANTING DEFENDANT AMERICA SERVICING COMPANY’S MOTION FOR SUMMARY JUDGMENT.

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