Ounyoung et al v. Federal Home Loan Mortgage Corporation et al
Filing
25
ORDER GRANTING DEFENDANTS' MOTION TO DISMISS PLAINTIFF'S VERIFIED COMPLAINT FILED JUNE 4, 2012 re: 7 . Signed by JUDGE LESLIE E. KOBAYASHI on 11/21/2012. ~ Excerpt of conclusion: "[T]his Cour t HEREBY DISMISSES all of Plaintiffs' claims WITH PREJUDICE. The Court DIRECTS the Clerk's Office to close the case." ~ Order follows hearing held 11/7/2012 on M/Dismiss (doc 7 ). Minutes (as amended): doc no. 24 . (afc)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
SAMRIT OUNYOUNG; AILYN T.
OUNYOUNG,
)
)
)
)
Plaintiffs,
)
vs.
)
)
FEDERAL HOME LOAN MORTGAGE
)
)
CORPORATION; ONEWEST BANK
FSB; DOES INCLUSIVE 1-100,
)
)
)
Defendants.
_____________________________ )
CIVIL NO. 12-00322 LEK-KSC
ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS
PLAINTIFF’S VERIFIED COMPLAINT FILED JUNE 4, 2012
Before the Court is Defendants Onewest Bank FSB
(“Onewest”) and Federal Home Loan Mortgage Corporation’s
(“FHLMC”, collectively “Defendants”) Motion to Dismiss
Plaintiff’s Verified Complaint Filed June 4, 2012 (“Motion”),
filed on August 1, 2012.
Plaintiffs Samrit Ounyoung and Ailyn T.
Ounyoung (“Plaintiffs”) filed their memorandum in opposition on
October 15, 2012, and Defendants filed their reply on October 22,
2012.
This matter came on for hearing on November 7, 2012.
Appearing on behalf of Defendants was Charles Prather, Esq., and
appearing on behalf of Plaintiffs was Erika Hunter, Esq.
After
careful consideration of the Motion, supporting and opposing
memoranda, and the arguments of counsel, Defendants’ Motion is
HEREBY GRANTED for the reasons set forth below.
BACKGROUND
Plaintiffs filed their verified complaint in this
action (“Complaint”) on June 4, 2012.
According to the
Complaint, on January 29, 2012, Plaintiffs executed a Note and
Mortgage in favor of Indymac Bank FSB (“Indymac”) for 76-6209
Leone Place, Kailua Kona, Hawai`i 96740 (“Property”).
[Complaint
at ¶¶ 12, 16.]
Plaintiffs state that, as of January 9, 2009, they were
“continu[ing] to correspond with INDYMAC BANK as to getting a
modification in order to stay in their home.”
[Id. at ¶ 18.]
On
or around September 14, 2009, Onewest filed a Notice of
Mortgagee’s Intention to Foreclose Under Power of Sale
(“Foreclosure Notice”) with the Bureau of Conveyances.
The
Foreclosure Notice identified Onewest as the mortgagor.
¶¶ 19, 23.]
[Id. at
Plaintiffs allege that, at the time Onewest filed
the Foreclosure Notice and when Onewest held the foreclosure sale
on March 23, 2011, Plaintiffs were “in the process of applying
and awaiting the results of a loan modification . . . .”
¶¶ 13, 21.]
[Id. at
Indymac allegedly assured Plaintiffs that “the non-
judicial foreclosure action would be held in abeyance pending the
modification efforts,” but Onewest sold the Property to itself
and then deeded it to FHLMC.
[Id. at ¶ 26.]
An Affidavit of
Foreclosure was filed on April 5, 2011, and FHLMC initiated an
ejectment action in a state district court on August 25, 2011.
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The state district court granted summary judgment in favor of
FHLMC.
[Id. at ¶ VI.]
Plaintiffs allege that Indymac “never sold,
transferred, or granted his Note or Mortgage to Defendant” and
that Onewest “failed to provide any evidence to verify the owner
and amount of Plaintiff’s Mortgage or validate the claim to
Plaintiff’s debt obligation.”
[Id. at ¶ 17.]
Plaintiffs do not
assert that they are parties or beneficiaries to the purported
assignment from Indymac to Onewest, but they argue that, because
there was no assignment, Onewest cannot claim any interest in the
Property.
[Id. at ¶ 20.]
Plaintiffs argue that Onewest’s
collection of Plaintiffs’ mortgage payments and Onewest’s
foreclosure on the Property are illegal and deceptive.
¶ 24.]
[Id. at
Plaintiffs also argue, in their background allegations,
that Onewest’s foreclosure process violated Haw. Rev. Stat.
§§ 667-5 through 667-10.
Thus, Plaintiffs contend that the power
of sale, the Foreclosure Affidavit, and the foreclosure deed are
void.
Plaintiffs allege that Defendants knew they were not
acting on behalf of the current beneficiary of the Note and
Mortgage.
[Id. at ¶¶ 27-37.]
Plaintiffs allege that they relied on Onewest’s or its
servicer’s misrepresentations and that they have suffered
damages, including inter alia having the title to their home
clouded and rendered unmarketable and losing their home in a non-
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judicial foreclosure sale and an ejectment action.
¶ 21.]
[Id. at
Plaintiffs also argue that FHLMC filed the ejectment
action in a state district court that did not have jurisdiction
to determine issues of title.
[Id. at ¶ 39.]
Plaintiffs state
that they have “offered to and [are] ready, willing and able to
unconditionally tender [their] obligation.”
[Id. at ¶ 47.]
The Complaint alleges the following claims: claims for
declaratory and injunctive relief to quiet title and determine
the status of Defendants’ interest, if any, in the Property
(“Count I”); violation of the Fair Debt Collection Practices Act
(“FDCPA”), 15 U.S.C. § 1692, et seq., (“Count II”); and
accounting (“Count III”).
Plaintiffs seek the following relief:
compensatory, special, and general damages; punitive and
exemplary damages; an order compelling Defendants to remove any
cloud on Plaintiffs’ title to the Property; an order determining
that Defendants have no legal rights to the Property, the Note,
or the Mortgage; a restraining order preventing Defendants from
instituting any action against the Property during the pendency
of this case; disgorgement of the amounts Defendants wrongfully
took from Plaintiffs, plus interest; attorneys’ fees and costs;
and any other appropriate relief.
I.
Motion
In the instant Motion, Defendants first argue that the
portion of Count I seeking declaratory relief improperly seeks
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review of past wrongs which allegedly occurred during the
underlying non-judicial foreclosure action.
They also note that,
in this district, it is well-settled that a claim for injunctive
relief cannot stand on its own.
4.]
[Mem. in Supp. of Motion at 3-
As to the portion of Count I alleging quiet title,
Defendants argue that, in order to bring such a claim, a
plaintiff “must allege that he or she has ‘satisfied their
obligations under the deed of trust.’”
[Id. at 4-5 (quoting
Wagner v. Aurora Loan Servicing, 2011 WL 6819041, at *12 (D. Haw.
Dec. 27, 2011)).]
Defendants therefore argue that this Court
must dismiss Count I.
As to Count II, Defendants argue that the claim is
limited to actions associated with the non-judicial foreclosure,
and this district court has recognized that a non-judicial
foreclosure is not an attempt to collect a debt.
[Id. at 5
(quoting Soriano v. Wells Fargo Bank, N.A., 2012 WL 1536065, at
*9 (D. Haw. Apr. 30, 2012)).]
Defendants therefore argue that
this Court must dismiss Count II.
As to Count III, Defendants argue that there is no
legal basis for a claim for an accounting because there is no
allegation in the Complaint that there was a confidential or
trust relationship between Plaintiffs and Defendants, nor is
there any allegation that an accounting is necessary because
there is no adequate remedy at law.
5
[Id. at 5-6 (quoting Lee v.
Mortgage Elec. Registration Sys., Inc., 2012 WL 2467085, at *7
(D. Haw. June 27, 2012)).]
Defendants therefore argue that this
Court must dismiss Count III.
II.
Memorandum in Opposition
In their memorandum in opposition, Plaintiffs first
argue that, if this Court dismisses Plaintiffs’ claims for
declaratory and injunctive relief as mere requests for relief
which are duplicative other causes of action, this Court must
allow Plaintiffs to amend their Complaint to allege a claim for
wrongful foreclosure in violation of Haw. Rev. Stat. § 667-5.
They assert that the Complaint contains sufficient factual
allegations to sustain a wrongful foreclosure claim, and
Plaintiffs emphasize that Hawai`i case law requires strict
compliance with the requirements of § 667-5.
Plaintiffs state
that they have properly alleged Defendants’ failure to provide
the necessary notices.
In fact, Plaintiffs allege that Onewest
does not even qualify as a mortgagee.
[Mem. in Opp. at 3-5.]
Plaintiffs also argue that this Court should allow them
to amend their Complaint to allege a claim for breach of contract
and a promissory estoppel claim because the Complaint alleges
that Plaintiffs “were promised that a nonjudicial foreclosure
action would not be held pending a loan modification review, and
said auction was held anyway[.]”
[Id. at 5.]
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As to the portion of Count I alleging a quiet title
claim, Plaintiffs emphasize that they are not alleging that they
satisfied any obligations under a deed of trust, and they are not
alleging that the trustee failed to transfer title in violation
of a contract.
They merely argue that their Property was
wrongfully foreclosed upon, and they have a right to have their
title restored and to continue making the monthly mortgage
payments provided for in the mortgage contract.
Plaintiffs urge
this Court to allow them to pursue their claim for quiet title
pursuant to Haw. Rev. Stat. § 669-1.
[Id. at 5-6.]
Plaintiffs argue that this Court should deny the Motion
or, at the very least, to grant them leave to amend.
III. Reply
In their reply, Defendants note that, at the time
Plaintiffs filed the memorandum in opposition, they were still
represented by Damon Senaha, Esq., and two days after the filing
of the memorandum in opposition, Plaintiffs filed a withdrawal
and substitution of counsel.
Defendants state that Plaintiffs’
new counsel appears to be pursing a new litigation course and new
causes of action.
Thus, the memorandum in opposition is
effectively a motion for leave to amend.
Defendants, however,
emphasize that Plaintiffs have not filed a motion for leave to
amend.
[Reply at 2.]
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The only claim that Defendants address in the reply is
the portion of Count I requesting quiet title.
Defendants
emphasize that this district court has recognized that tender is
required regardless of what the instrument of debt is and that
all quiet title claims require an allegation of ability to
tender.
[Id. at 3 (citing Klohs v. Wells Fargo Bank, N.A., 2012
WL 4758126, at *7 (D. Haw. Oct. 4, 2012)).]
DISCUSSION
Prior to the hearing on the Motion, the Court issued an
inclination directing the parties to address whether Plaintiffs’
claims in the instant case are precluded because of the res
judicata, or claim preclusion, effect of the state court
ejectment action.
This Court has stated:
This Court must look to Hawai`i law to
determine whether the Judgment and Interlocutory
Decree of Foreclosure has preclusive effect. See
Bumatay v. Fin. Factors, Ltd., Civil No. 10-00375
JMS/LEK, 2010 WL 3724231, at *4 (D. Hawai`i Sept.
16, 2010) (citing Migra v. Warren City Sch. Dist.
Bd. of Educ., 465 U.S. 75, 81 (1984) (“It is now
settled that a federal court must give to a
state-court judgment the same preclusive effect as
would be given that judgment under the law of the
State in which the judgment was rendered.”)).
Hawai`i state courts use the term “claim
preclusion” instead of res judicata. Id. at *4
n.3 (citing Bremer v. Weeks, 104 Haw. 43, 53, 85
P.3d 150, 160 (2004)).
Under Hawaii law, claim preclusion
prevents a party from relitigating “not
only . . . issues which were actually
litigated in [a prior] action, but also
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. . . all grounds of claim and defense which
might have been properly litigated in the
[prior] action.” See Aganos v. GMAC
Residential Funding Corp., 2008 WL 4657828,
at *4 (D. Haw. Oct. 22, 2008) (quoting Bremer
v. Weeks, 104 Haw. 43, 53, 85 P.3d 150, 160
(2004)).
Id. at *4 (alterations in original).
As the parties asserting claim preclusion,
the Moving Defendants have the burden of
establishing that: “‘(1) there was a final
judgment on the merits, (2) both parties are the
same or in privity with the parties in the
original suit, and (3) the claim decided in the
original suit is identical with the one presented
in the action in question.’” Id. at *5 (quoting
Bremer, 104 Haw. at 54, 85 P.3d at 161).
Radford v. U.S. Bank N.A., No. CV 10–00766 LEK–KSC, 2011 WL
4054863, at *7 (D. Hawai`i Sept. 9, 2011) (alterations in
Radford).
I.
Final Judgment
According to the docket sheet in the ejectment action,
the state district court granted summary judgment in favor of
FHLMC on May 3, 2012 and issued a Judgment for Possession and a
Writ of Possession on the same day.
Actions in the state
district courts are subject to appeal.
See Haw. Rev. Stat.
§ 604-5(b) (“The district courts shall try and determine all
actions without a jury, subject to appeal according to law.”).
The respondents in the ejectment action, including Plaintiffs,
could have appealed from the order granting summary judgment, the
judgment of possession, and the writ of possession.
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See, e.g.,
Deutsche Bank Nat’l Trust Co. v. Peelua, 126 Hawai`i 32, 35, 265
P.3d 1128, 1131 (2011) (respondent filed notice of appeal
following judgment of possession which, inter alia, ordered that
writ of possession be issued); Miyasaki v. Frank’s Auto Paint,
Inc., No. 29959, 2010 WL 3819571, at *1 (Hawai`i Ct. App. Sept.
29, 2010) (appeal from summary judgment orders, judgment of
possession/ejectment, and writ of possession/ejectment).
Neither Plaintiffs nor any of the other respondents in
the ejectment action filed a notice of appeal within thirty days.
See Haw. R. App. P. 4(a)(1) (“When a civil appeal is permitted by
law, the notice of appeal shall be filed within 30 days after
entry of the judgment or appealable order.”).
The Court
therefore finds that there was a final judgment in the ejectment
action for res judicata/claim preclusion purposes.
See Radford,
2011 WL 4054863, at *8.
II.
Identity of the Parties
Second, in order for res judicata/claim preclusion to
apply, the parties in the instant case must be the same as the
parties in the ejectment action, or they must be in privity with
the parties in the ejectment action.
See id.
This factor is met
as to Plaintiffs and FHLMC because they were parties in the
ejectment action.
See id. (some citations omitted) (citing
Albano v. Norwest Fin. Haw., 244 F.3d 1061, 1064 (9th Cir. 2001)
(finding the “same parties” prong of the res judicata test
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“pellucid” where the same parties to the state foreclosure
proceeding appeared in a federal action)).
Onewest was not a party to the ejectment action.
This
Court, however, has recognized that:
Under Hawai`i law, the concept of privity has
moved from the conventional and narrowly defined
meaning of mutual or successive relationship[s] to
the same rights of property to merely a word used
to say that the relationship between one who is a
party of record and another is close enough to
include that other within res adjudicata.
Id. at *9 (alteration in Radford) (quotation marks and some
citations omitted) (citing In re Dowsett Trust, 7 Haw. App. 640,
646, 791 P.2d 398, 402 (Haw. App. 1990)).
Insofar as Onewest was the foreclosing mortgagee which
deeded the Property to FHLMC, this Court finds that there is
sufficient closeness between Onewest and FHLMC to render them in
privity.
This Court therefore finds that the identity of the
parties requirement is satisfied as to all parties.
III. Identical Claims
The final requirement for res judicata/claim preclusion
is that the claim that was decided in the ejectment action is
identical to the one presented in the instant case.
See id.
(citation omitted).
“To determine whether a litigant is asserting the
same claim in a second action, the court must look
to whether the ‘claim’ asserted in the second
action arises out of the same transaction, or
series of connected transactions, as the ‘claim’
asserted in the first action.” Kauhane v. Acutron
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Co., 71 Haw. 458, 464, 795 P.2d 276, 279 (1990)
(citing Restatement (Second) of Judgments § 24
(1982)). That is, claims arising out of the same
transaction “constitute the same ‘claims’ for
[claim preclusion] purposes.” Id. Moreover,
claim preclusion “applies if the issues ‘could
have been raised in the earlier state court
actions.’” Albano [v. Norwest Fin. Hawaii, Inc.],
244 F.3d [1061,] 1064 [(9th Cir. 2001)] (citations
omitted); see also Bremer, 104 Haw. at 53, 85 P.3d
at 160 (observing that under Hawaii law “[t]he
judgment of a court of competent jurisdiction
. . . precludes the relitigation . . . of all
grounds of claim and defense which might have been
properly litigated in the first action but were
not litigated or decided”).
Id. (alterations in Radford) (citation omitted).
The ejectment action and the instant case involve the
same series of connected transactions, i.e. Plaintiffs’ alleged
default on their loan, the foreclosure on the Property, and the
purported new title-holder’s attempt to take possession of the
Property.
Plaintiffs, however, argue that the ejectment action
and the instant case do not involve identical claims because
FHLMC brought the ejectment action in a state district court,
which did not have jurisdiction to decide the dispute over the
propriety of FHLMC’s title.
Haw. Rev. Stat. § 604-5(d) does state, in pertinent
part, that: “The district courts shall not have cognizance of
real actions, nor actions in which the title to real estate comes
in question[.]”
See also Haw. Rev. Stat. § 604-6 (“Nothing in
section 604-5 shall preclude a district court from taking
jurisdiction in ejectment proceedings where the title to real
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estate does not come in question at the trial of the
action. . . .”).
A defendant in an ejectment action, however,
can “assert, as a defense to the jurisdiction of a district
court, that the action is one in which title to real estate will
come into question[.]”
1132.
Peelua, 126 Hawai`i at 36, 265 P.3d at
Rule 12.1 of the Hawai`i District Court Rules of Civil
Procedure states:
Whenever, in the district court, in defense of an
action in the nature of an action of trespass or
for the summary possession of land, or any other
action, the defendant shall seek to interpose a
defense to the jurisdiction to the effect that the
action is a real action, or one in which the title
to real estate is involved, such defense shall be
asserted by a written answer or written motion,
which shall not be received by the court unless
accompanied by an affidavit of the defendant,
setting forth the source, nature and extent of the
title claimed by defendant to the land in
question, and such further particulars as shall
fully apprise the court of the nature of
defendant’s claim.
In the ejectment action, the state district court
ultimately determined that FHLMC was entitled to possession of
the Property and to eject the respondents, including Plaintiffs,
from the Property.
While the state district court could not rule
upon a challenge to FHLMC’s title to the Property, if Plaintiffs
had properly raised the issue pursuant to Hawai`i District Court
Rule of Civil Procedure 12.1, the district court would have
dismissed the ejectment action for lack of jurisdiction.
FHLMC
then could have brought the action in state circuit court, which
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would have had jurisdiction to rule upon a challenge to FHLMC’s
title.
Cf. Norwest Bank Minn. v. Failauga, No. 26947, 2007 WL
4532127, at *1 (Hawai`i Dec. 21, 2007) (appeal from ejectment
action brought in state circuit court).
Thus, although
Plaintiffs’ challenge to FHLMC’s title was not actually litigated
or decided in the ejectment action, because Plaintiffs could have
raised the title issues in the ejectment action, this Court finds
that the identical claims requirement of the res judicata/claim
preclusion doctrine is satisfied.
See Radford, 2011 WL 4054863,
at *9 (citing Albano, 244 F.3d at 1064; Bremer, 104 Haw. at 53,
85 P.3d at 160).
This Court finds that all of the requirements of the
res judicata/claim preclusion doctrine are satisfied, and
therefore all of Plaintiffs’ claims in the instant case are
barred by the res judicata/claim preclusion effect of the
ejectment action.
Insofar as all of Plaintiffs’ claims are
barred, Plaintiffs have failed to “state a claim to relief that
is plausible on its face.”
U.S. 544, 570 (2007).
See Bell Atl. Corp. v. Twombly, 550
Further, dismissal with prejudice is
appropriate because Plaintiffs cannot cure this defect through
any amendment.
See Radford, 2011 WL 4054863, at *11.
CONCLUSION
On the basis of the foregoing, Defendants’ Motion to
Dismiss Plaintiff’s Verified Complaint Filed June 4, 2012, which
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Defendants’ filed on August 1, 2012, is HEREBY GRANTED and this
Court HEREBY DISMISSES all of Plaintiffs’ claims WITH PREJUDICE.
The Court DIRECTS the Clerk’s Office to close the case.
IT IS SO ORDERED.
DATED AT HONOLULU, HAWAII, November 21, 2012.
/S/ Leslie E. Kobayashi
Leslie E. Kobayashi
United States District Judge
SAMRIT OUNYOUNG, ET AL. V. FEDERAL HOME LOAN MORTGAGE
CORPORATION, ET AL; CIVIL NO. 12-00322 LEK-KSC; ORDER GRANTING
DEFENDANTS’ MOTION TO DISMISS PLAINTIFF’S VERIFIED COMPLAINT
FILED JUNE 4, 2012
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