Bateman v. Countrywide Home Loans et al

Filing 70

ORDER DISMISSING SECOND AMENDED COMPLAINT; ORDER DENYING MOTION SEEKING LEAVE TO FILE THIRD AMENDED COMPLAINT re 46 , 60 - Signed by CHIEF JUDGE SUSAN OKI MOLLWAY on 5/20/13. "The Second Amended Complaint is dismissed, and the motion seeking leave to file a Third Amended Complaint is denied. Bateman is given leave to file a motion seeking leave to file a different Third Amended Complaint no later than June 14, 2013. Any such proposed complaint must take into account the rulings in this case. If Bateman fails to timely file such a motion, the Clerk of Court will automatically enter judgment in favor of Defendants and close this case." (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). 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
CHANCE K. S. BATEMAN,

)
)
Plaintiff,
)
)
vs.
)
)
COUNTRYWIDE HOME LOANS, aka
)
BAC Home Loan Servicing, LP; )
THE BANK OF NEW YORK MELLON, )
as Trustee for the
)
Certificateholders, CWABS,
)
Inc., Asset-Backed
)
Certificate Series 2005-3,
)
aka CWL 2005-3;
)
CWABS, Inc.;
)
MERSCORP, INC.;
)
MORTGAGE ELECTRONIC
)
REGISTRATION SYSTEMS, INC., a )
wholly-owned subsidiary of
)
Merscorp, Inc.;
)
CHARTER FUNDING;
)
KEVIN A. DURHAM, individually )
and as assistant secretary
)
for Mortgage Electronic
)
Registration Systems, Inc.
)
and Max Default Services
)
Corp.;
)
CALEB G HARGIS, individual
)
and as notary;
)
CORPORATE DOES 1-50;
)
JOHN DOES 1-50; and
)
JANE DOES 1-50
)
)
Defendants.
)
_____________________________ )

CIVIL NO. 12-00033 SOM/BMK
ORDER DISMISSING SECOND
AMENDED COMPLAINT; ORDER
DENYING MOTION SEEKING LEAVE
TO FILE THIRD AMENDED
COMPLAINT

ORDER DISMISSING SECOND AMENDED COMPLAINT
I.

INTRODUCTION.
The parties’ failure to acknowledge earlier proceedings

in this case has led to avoidable complications for the court.
What happens in an order or hearing does not stay in that order

or hearing.

As the case proceeds, the parties should expect

those prior matters to affect what follows.
On November 14, 2012, this court dismissed the First
Amended Complaint filed by Plaintiff Chance K.S. Bateman, giving
him leave to file a First Amended Complaint.

See ECF No. 41.

On December 7, 2012, Bateman filed his Second Amended
Complaint.

This document completely ignored the reasoning set

forth in the court’s order dismissing the First Amended
Complaint.

Because the Second Amended Complaint fails to cure

the deficiencies discussed in the court’s order dismissing the
First Amended Complaint, the court grants Defendants’ motion of
December 20, 2012, that sought dismissal of the Second Amended
Complaint.

See ECF No. 46.

The court also denies Bateman’s

motion seeking leave to file a Third Amended Complaint, ECF No.
60, because the proposed Third Amended Complaint suffers from the
same deficiencies.
II.

FACTUAL BACKGROUND AND STANDARD OF REVIEW.
Bateman’s Second Amended Complaint is 43 pages long

(without exhibits) and has 144 paragraphs with additional
subparts.

It is not the “short and plain statement of the claim

showing” Bateman’s entitlement to relief required by Rule 8(a)(2)
of the Federal Rules of Civil Procedure.

Despite its length, the

Second Amended Complaint fails to add any new, material facts.
Accordingly, the court incorporates the factual background and

2

standard of review sections set forth in the court’s order of
November 14, 2013.

In incorporating the factual background by

reference, the court recognizes that the factual allegations have
been set forth in different numerical paragraphs.

That

distinction is immaterial for purposes of this order.
III.

ANALYSIS.
A.

Bateman Fails to Assert a Viable Section 480-2
Claim.

In the court’s order of November 14, 2012, the court
ruled that Bateman lacks standing to challenge the assignment of
his loan because he was not a party to the assignment.

The court

ruled that only parties to such assignments may generally seek to
challenge the assignments because arguments raised in such
challenges go to whether the loan is voidable, as opposed to void
ab initio.

In so ruling the court noted that Bateman had

challenged the various transfers of his note and mortgage as
violating chapter 480 of Hawaii Revised Statutes.

The court

stated that, if one of the transfers violated section 480-2, the
transfer would be void, as opposed to voidable.

But the court

ruled that Bateman did not allege facts from which a violation of
chapter 480 could be established such that the transfer would be
void.

The court stated,
To the extent Bateman challenges voidable
agreements, those challenges do not convert
Bank of New York’s conduct into “unfair or
deceptive acts or practices in the conduct of
any trade or commerce” such that the voidable
3

agreements become void under chapter 480. In
other words, a voidable agreement--one with a
potential defect that a party to the
agreement may assert–-does not violate
section 480-2 such that it automatically
becomes void under section 480-12.
See ECF No. 41.
For the most part, Bateman’s Second Amended Complaint
simply reasserts the claims of the First Amended Complaint under
section 480-2 of Hawaii Revised Statutes.

For the reasons

included in the court’s order of November 14, 2012, Bateman may
not maintain his section 480-2 claim.

Rebranding the claim does

not make it viable.
The thrust of Bateman’s section 480-2 claim is again
that the assignments of his loan were improper.

Under the

circumstances presented here, that claim is not cognizable.
Section 480-2 of Hawaii Revised Statutes states, “Unfair methods
of competition and unfair or deceptive acts or practices in the
conduct of any trade or commerce are unlawful.”
Two distinct causes of action exist under section
480-2: claims alleging unfair methods of competition and claims
alleging unfair or deceptive acts or practices.

See Haw. Med.

Ass’n v. Haw. Med. Serv. Ass’n, 113 Haw. 77, 110, 148 P.3d 1179,
1212 (2006).

It appears that Bateman is asserting an unfair or

deceptive acts or practices claim.
The phrase “unfair or deceptive acts or practices in
the conduct of any trade or commerce” is not defined in chapter
4

480.

See Eastern Star, Inc. v. Union Bldg. Materials Corp., 6

Haw. App. 125, 132, 712 P.2d 1148, 1154 (Haw. App. 1985).

Hawaii

courts have held that a “practice is unfair when it offends
established public policy and when the practice is immoral,
unethical, oppressive, unscrupulous or substantially injurious to
consumers.”

Id. at 133, 712 P.2d at 1154 (citations omitted).

A deceptive act is defined as “an act causing, as a natural and
probable result, a person to do that which he would not otherwise
do.”

Id.

A plaintiff establishes that there was “deception”

under chapter 480 by demonstrating that there was: (1) a
representation, omission, or practice that (2) was likely to
mislead consumers acting reasonably under the circumstances when
(3) the representation, omission, or practice was material.
Tokuhisa v. Cutter Mgmt. Co., 122 Haw. 181, 195, 223 P.3d 246,
260 (2009).

A representation, omission, or practice is

“material” if it involves information that is important to
consumers and is likely to affect their conduct regarding a
product.

Id.

Whether an act or practice is deceptive is judged

by an objective “reasonable person” standard.

Yokoyama v.

Midland Nat'l Life Ins. Co.,594 F.3d 1087, 1092 (9th Cir. 2010)
(“Hawaii’s consumer protection laws look to a reasonable
consumer, not the particular consumer.”).
Because Bateman is challenging assignments he was not a
party to, he is not asserting a claim that he was misled by any

5

Defendant’s “deception.”

That is, he is not alleging that he was

misled by a Defendant’s material representation, omission, or
practice.

It therefore appears that Bateman is arguing that the

assignments were “unfair”--that the assignments “offended
established public policy” or were “immoral, unethical,
oppressive, unscrupulous or substantially injurious to
consumers.”

However, Bateman fails to support that argument with

relevant factual allegations.
Instead, Bateman, in his capacity as a mortgagor, is
once again attempting to challenge the efficacy of the transfers
of his loan when neither the transferring nor receiving lenders
have asserted that any transfer was voidable.

Bateman is

attempting to argue that the bank seeking to enforce rights under
the loan documents is committing an “unfair” practice by
asserting rights transferred to it when none of the parties to
the transfer have indicated any inclination to seek avoidance of
the transfer.

Bateman is not contending that he has no

obligations under the loan documents, that multiple banks are
attempting to enforce the same loan documents, or that he has
performed on his obligations under the loan documents.

In short,

Bateman simply does not allege facts demonstrating any “unfair”
conduct for purposes of section 480-2.
480 claim is dismissed.

6

Accordingly, the chapter

B.

Bateman’s Quiet Title Claim is Dismissed.

The Second Amended Complaint also asserts a claim of
Quiet Title.

That claim is dismissed.

Bateman appears to be making a claim under section
669–1(a) of Hawaii Revised Statutes, which provides that a quiet
title “[a]ction may be brought by any person against another
person who claims, or who may claim adversely to the plaintiff,
an estate or interest in real property, for the purpose of
determining the adverse claim.”

Because Bateman has not

demonstrated standing to challenge the various assignments, and
because Bateman’s quiet title claim appears to be based on those
allegedly improper assignments, the quiet title claim is
dismissed.
C.

The Motion Seeking Leave to File a Third Amended
Complaint is Denied.

Without waiting for this court to rule on the motion to
dismiss the Second Amended Complaint, Bateman has sought leave to
file a Third Amended Complaint.

Because the proposed Third

Amended Complaint suffers from the same deficiencies as the
Second Amended Complaint, the motion is denied.

Granting leave

to file the proposed Third Amended Complaint would be futile.
See Hartmann v. Cal. Dep’t of Corrections & Rehabilitation, 707
F.3d 1114, 1130 (9th Cir. 2013) (“A district court may deny leave
to amend when amendment would be futile.”).

7

D.

The Court Declines to Determine Whether Defendants
May Seek a Deficiency Judgment From Bateman.

At the hearing of November 6, 2012, Defendants, in
answer to a question posed in the court’s usual prehearing
inclinations, stated that they believed that they could not seek
a deficiency judgment against Bateman.

Although it appears that

Defendants have subsequently attempted to modify that position,
see ECF No. 61, it does not appear that Defendants have any
intention of seeking a deficiency judgment against Bateman.

See

id. at 5 (“Defendants have no current intention to pursue such a
judgment at this time”).

Given the dismissal of the Second

Amended Complaint and relying on Defendants’ stated intention not
to seek a deficiency judgment, the court does not and need not
presently determine whether Defendants may, notwithstanding the
position they took on November 6, 2012, seek such a deficiency
judgment.
IV.

CONCLUSION.
The Second Amended Complaint is dismissed, and the

motion seeking leave to file a Third Amended Complaint is denied.
Bateman is given leave to file a motion seeking leave to file a
different Third Amended Complaint no later than June 14, 2013.
Any such proposed complaint must take into account the rulings in
this case.

If Bateman fails to timely file such a motion, the

8

Clerk of Court will automatically enter judgment in favor of
Defendants and close this case.
IT IS SO ORDERED.
DATED: Honolulu, Hawaii, May 20, 2013.

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

Bateman v. Countrywide Home Loans Inc., et al.; Civ. No. 12-00033 SOM/BMK; ORDER
DISMISSING SECOND AMENDED COMPLAINT; ORDER DENYING MOTION SEEKING LEAVE TO FILE THIRD
AMENDED COMPLAINT

9