Kitamura et al v. Lihue Townhouse, AOAO of et al
Filing
49
ORDER GRANTING (1) DEFENDANT PHILIP S. NERNEY'S MOTION FOR PARTIAL SUMMARY JUDGMENT AS TO COUNT I AND TO DISMISS COUNTS III & IV OF THE COMPLAINT FILED JUNE 20, 2012 16 ; (2) DEFENDANT PHILIP S. NERNEYS MOTION TO STRIKE CONCISE STATEMENT IN OPP OSITION TO MOTION AND MEMORANDUM IN OPPOSITION TO MOTION 34 ; AND (3) DEFENDANTS AOAO OF LIHUE TOWNHOUSE, RE3, LLC, REAL ESTATE SERVICES, WAYNE RICHARDSON, AND KAREN REBECCA SAKIMAE'S SUBSTANTIVE JOINDER 27 , 35 . Excerpt of Conclusion: ~ "There being no remaining federal claims and no other basis for federal jurisdiction, the Court declines to assert supplemental jurisdiction over the remaining state law claims. The Clerk of Court is directed to terminate this action." ~ Signed by JUDGE LESLIE E. KOBAYASHI on 3/29/2013. ~ Written Order follows minute orders issued January 25, 2013 (doc 43 ), and February 28, 2013 (doc 46 ) ~ (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
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Plaintiffs,
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vs.
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AOAO OF LIHUE TOWNHOUSE;
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RE3, LLC, REAL ESTATE
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SERVICES; WAYNE RICHARDSON;
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KAREN REBECCA SAKIMAE;
PHILLIP S. NERNEY; JOHN DOES )
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1-10; JANE DOES 1-10; DOE
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CORPORATIONS 1-10; DOE
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PARTNERSHIPS 1-10; DOE NONPROFIT ENTITIES 1-10; and DOE )
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GOVERNMENTAL ENTITIES 1-10,
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Defendants.
_____________________________ )
SUZANNE M. KITAMURA;
MCGRATH PROPERTIES, LLC;
SUZANNE M. KITAMURA as
Custodian for Dominique Angel
Fumes, a Minor Child Born on
12/13/1996,
CIVIL NO. 12-00353 LEK-BMK
ORDER GRANTING (1) DEFENDANT PHILIP S. NERNEY’S
MOTION FOR PARTIAL SUMMARY JUDGMENT AS TO COUNT I AND TO
DISMISS COUNTS III & IV OF THE COMPLAINT FILED JUNE 20, 2012;
(2) DEFENDANT PHILIP S. NERNEY’S MOTION TO
STRIKE CONCISE STATEMENT IN OPPOSITION TO MOTION
AND MEMORANDUM IN OPPOSITION TO MOTION; AND
(3) DEFENDANTS AOAO OF LIHUE TOWNHOUSE,
RE3, LLC, REAL ESTATE SERVICES, WAYNE RICHARDSON,
AND KAREN REBECCA SAKIMAE’S SUBSTANTIVE JOINDER
Before the Court are (1) Defendant Philip S. Nerney’s
(“Nerney”) Motion for Partial Summary Judgment as to Count I and
to Dismiss Counts III & IV of the Complaint Filed June 20, 2012
(“Nerney Motion”), filed October 24, 2012 [dkt. no. 16;]
(2) Nerney’s Motion to Strike Concise Statement in Opposition to
Motion and Memorandum in Opposition to Motion (“Motion to
Strike”), filed January 14, 2013 [dkt. no 34;] and (3) Defendants
AOAO of Lihue Townhouse (“AOAO”), RE3, LLC, Real Estate Services
(“RE3”), Wayne Richardson, and Karen Rebecca Sakimae’s Joinder in
both of Nerney’s motions [dkt. nos. 27, 35] (all collectively
“Motions”).
Plaintiffs Suzanne M. Kitamura, McGrath Properties,
LLC (“McGrath”), and Suzanne M. Kitamura as Custodian for
Dominique Angel Fumes (collectively “Plaintiffs”) filed their
memorandum in opposition to the Nerney Motion on January 11,
2013, and their memorandum in opposition to the Motion to Strike
on January 23, 2013.
Defendants filed their reply briefs in
support of the Nerney Motion on January 14, 2013.
The Court
finds these motions suitable for disposition without a hearing
pursuant to Rule LR7.2(d) of the Local Rules of Practice of the
United States District Court for the District of Hawai`i.
After
careful consideration of the Motions, and the relevant legal
authority, the Motions are HEREBY GRANTED.
BACKGROUND
Plaintiffs filed their Complaint in this action on
June 20, 2012, alleging violations of federal debt collection
practices law, breach of contract, negligence, and unfair and
deceptive practices.
[Complaint at ¶ 1.]
They allege that
Plaintiffs own a unit in the Lihue Townhouse condominium project
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and are members of the AOAO, and that Nerney sought to collect
arrears owed by Plaintiffs to the AOAO for association fees.
Plaintiffs claim that Kitamura attempted to pay the alleged
arrears, but that Richardson, in his capacity as property manager
for the AOAO, refused to accept payment.
Instead, Plaintiffs
allege that Nerney filed a complaint to foreclose on the property
for failure to pay AOAO fees, and that Richardson and Sakimae
sought a temporary restraining order and injunction to prevent
Kitamura from paying the association fees in person.
Plaintiffs
allege that they paid some of the outstanding fees, but that
Defendants did not arbitrate the matter as ordered by a state
circuit court judge, and that Defendants continue to harass and
intimidate Plaintiffs into abandoning the property.
[Id. at
¶¶ 12-25.]
I.
Nerney Motion
According to Nerney, the instant case is a retaliatory
lawsuit following adverse state court rulings and entry
of final judgment against McGrath and Kitamura as Custodian for
Dominique Angel Funes (“Custodian”) in Civil No. 0-1-0060 (Fifth
Circuit) (“McGrath Action”).
He states that all claims in the
McGrath Action have been adjudicated in favor the AOAO and
against McGrath and Custodian.
Further, a foreclosure action
filed by the AOAO against McGrath remains unadjudicated at the
time of the filing of the Nerney Motion.
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Nerney asserts that he,
as counsel for the AOAO, initiated Civil No. 08-1-0202
(“Foreclosure Action”) to collect unpaid common expense
assessments claimed by the AOAO with respect to McGrath’s rental
property at the Lihue Townhouse condominium.
[Mem. in Supp. of
Nerney Mot. at 2.]
He moves for summary judgment on Count I, which alleges
a violation of the Federal Debt Collections Practices Act
(“FDCPA”), 15 U.S.C. §§ 1692-1692p.
He argues that the
Plaintiffs lack standing to bring such a claim because Kitamura,
individually, does not own the property, and McGrath, which has
title to the property, is in receivership, and a Receiver/Trustee
has been appointed to settle its affairs.
Nerney argues that the
court-appointed Receiver/Trustee is the real party in interest to
bring any claims on behalf of the entity.
He also requests that
the Court decline to assert supplemental jurisdiction over the
remaining claims.
A.
[Id. at 3-10.]
AOAO, RE3, Richardson, and Sakimae’s Joinder
The remaining Defendants also ask the Court to grant
summary judgment as to Count I, and to decline to exercise
jurisdiction over Plaintiffs’ remaining state law claims, thereby
dismissing Counts II, III, and IV.
In addition to the arguments
raised by Nerney, the remaining Defendants argue that they do not
qualify as “debt collectors” under the FDCPA.
Substantive Joinder at 4-8.]
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[Mem. in Supp. of
B.
Plaintiffs’ Opposition
In their late-filed memorandum in opposition,
Plaintiffs argue that the Court has jurisdiction and they have
standing to bring their claims under the FDCPA.
Plaintiffs state
that the original transfer of the property from McGrath to
Custodian was not fraudulent, but that the transfer back from
Custodian to McGrath was not proper, because McGrath was a
terminated entity.
They argue that the property belongs to
Custodian, and therefore, the collection actions against the
property are collection actions against her for purposes of the
FDCPA.
[Mem. in Opp. to Nerney Mot. at 9-10.]
Plaintiffs further argue that Defendants’ refusal to
return tendered funds in February 2012 is “an attempt to collect
a debt,” which occurred within one year of the filing of the
Complaint, and that the property is not a business rental
property, but “its purpose is actually to provide security for
Plaintiff Funes in the future.”
C.
[Id. at 10-13.]
Defendants’ Replies
1.
Nerney Reply
In his reply, Nerney first notes that, due to
Plaintiffs’ untimely filing, he had only one business day in
which to respond and file a reply brief.
He also states that
Plaintiffs did not oppose in their Concise Statement of Facts,
and therefore admit, that: Kitamura, individually, never owned
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the property; McGrath is not a natural person; the property was
the subject of a non-judicial foreclosure which was blocked by
the re-transfer of the property from Custodian back to McGrath;
and the property was not used as Plaintiffs’ primary residence,
but was rented out for the business purpose of making a profit.
[Reply to Nerney Mot. at 2-4.]
Nerney explains that, after default was entered in the
Foreclosure Action, McGrath fraudulently transferred title to
Custodian.
The AOAO then began a non-judicial foreclosure
against the property.
Custodian was not successful in her
attempt to enjoin the non-judicial foreclosure, and then retransferred the property back to McGrath on the morning of the
non-judicial foreclosure auction.
2.
[Id. at 10-11.]
AOAO, RE3, Richardson, and Sakimae’s Reply
The additional Defendants assert in their reply that
Plaintiffs do not provide sufficient legal or factual bases for
their FDCPA claims, including: (1) whether Kitamura,
individually, McGrath, or Custodian has standing; (2) how the
FDCPA applies to rental property debt; (3) why the claim is not
time-barred; (4) how any of the parties are debt collectors;
(5) or addressed why this Court should exercise jurisdiction over
Plaintiffs’ ancillary claims.
[Reply in Supp. of Substantive
Joinder at 7-11.]
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II.
Motion to Strike
Plaintiffs’ memorandum in opposition to the Nerney
Motion was due on Monday, January 7, 2013, and was not filed
until Friday, January 11, 2013, after 10:00 p.m.
Defendant
Nerney moves to strike the late-file memorandum in opposition and
separate and concise statement of facts (“CSOF”) on the grounds
that they were untimely and because Plaintiffs’ exhibits attached
to their CSOF are not properly authenticated.
He notes that,
because Plaintiffs filed these documents so late, Defendants had
one business day in which to prepare their reply memoranda, due
on Monday, January 14, 2013, and that they were substantially
prejudiced by the late filing.
Defendant Nerney further states that Plaintiffs have
been dilatory with respect to other filings and appearances,
including: (1) McGrath has not filed a Corporate Disclosure
Statement; (2) Plaintiffs have not filed a Rule 16 Scheduling
Conference Statement; (3) neither Plaintiffs nor their counsel
appeared at the November 9, 2012 Rule 16 Scheduling Conference;
and (4) Plaintiffs have not filed their initial disclosures.
B.
Plaintiffs’ Opposition
In Plaintiffs’ late-filed opposition to the Nerney
Motion, they state that the “memorandum could not be filed until
January 11, 2013 because Plaintiff Kitamura was not available to
help with the affidavit which must accompany this Memorandum.
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Consequently, the Memorandum could not be filed until Plaintiff
Kitamura could help with and sign the affidavit which must
accompany this complex response.”
at 3.]
[Mem. in Opp. to Nerney Mot.
In her affidavit, Kitamura states that, “Although my
attorney Ramon J. Ferrer has called me on numerous occasions over
the last month to help him with the affidavit in this case, I
have not been able to generate the energy to do so.
Even coming
to his office yesterday has been very difficult for me.
I have
in my possession the documents Mr. Ferrer needs but have not been
able to get to his office to give them to him.”
[Kitamura Aff.
Re Medical Condition (dkt. no. 30-28), at ¶¶ 8-9.]
In opposition to the Motion to Strike, Plaintiffs
submit the Declarations of Jeffrey H. Chester, DO, and Micki Ly,
MD, which indicate that Plaintiff Kitamura is suffering from
extreme fatigue, but do not indicate any urgent medical diagnosis
or emergency health matters that would have prevented her from
assisting in the preparation of Plaintiffs’ Opposition.
DISCUSSION
I.
Motion to Strike
Pursuant to Local Rule LR7.4, opposition memoranda are
due no later that 21 days before the hearing.
The Local Rule
also provides that: “Any opposition or reply that is untimely
filed may be disregarded by the court or stricken from the
record.”
Plaintiff’s memorandum in opposition to the Nerney
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Motion was due on Monday, January 7, 2013.
It was filed on
Friday, January 11, 2013, after 10:00 p.m.
To the extent Plaintiffs claim that the filing was
delayed due to Kitamura’s inability to complete and sign her
affidavit, the Court finds this excuse unpersuasive.
Plaintiffs
had other options besides filing late; they could have submitted
a timely opposition and sought leave to file the original signed
affidavit thereafter.
Further, the Nerney Motion was filed in
October, and Plaintiffs were aware up to one month prior that
they might have problems preparing their opposition memoranda due
to Plaintiff Kitamura’s health concerns.
Plaintiffs, however,
did not contact opposing counsel or the Court, or otherwise seek
a modification of the briefing schedule.
Defendants were
prejudiced by the late filing, but nevertheless made
extraordinary efforts to timely file their reply briefs.
In
light of Plaintiffs’ late filing of this and other documents, and
the resulting prejudice to Defendants, the Court HEREBY GRANTS
the Motion to Strike.1
II.
Nerney Motion and Substantive Joinder
Pursuant to Federal Rule of Civil Procedure 56(a), a
party is entitled to summary judgment “if the movant shows that
1
Although the Court has stricken Plaintiffs’ late filings,
it has independently reviewed them, and finds that they do not
establish any genuine issues of material fact that would preclude
the entry of summary judgment as to Count I.
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there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.”
A.
FDCPA Claim (Count I)
Count I alleges a violation of the FDCPA, 15 U.S.C.
§§ 1692-1692p, based on Defendants’ attempts to secure payment of
association fees from Plaintiffs.
The Court first notes that,
Kitamura, individually, does not own the property and cannot
bring a claim for alleged FDCPA violations.
Second, McGrath,
which has former and current title to the property is not a
“natural person” entitled to bring a claim as a “consumer” as set
forth in 15 U.S.C. §§ 1692a(3).
Further, McGrath is in
receivership, and a Trustee has been appointed to settle its
affairs, therefore, the Trustee would be the real party in
interest.
Additionally, the claims against the AOAO must fail
because it is not a “debt collector” under the FDCPA because it
has not attempted to collect a debt “owed or due another.”
U.S.C. § 1692a(6).
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Moreover, beyond these issues with individual
parties, the Court finds that Plaintiffs cannot maintain an FDCPA
claim as a matter of law, based on the undisputed record.
To the extent the FDCPA claim is based on the
foreclosure proceedings, the claim fails as a matter of law.
See, e.g., Caraang v. PNC Mortgage, 795 F. Supp. 2d 1098, 1107
(D. Hawai‘i 2011) (“This district court has ruled that a lender
pursuing a nonjudicial foreclosure is not attempting to collect a
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debt for purposes of the FDCPA.”); Hanaway v. JPMorgan Chase
Bank, No. SACV 10–1809 DOC(PLAx), 2011 WL 672559, at *4 (C.D.
Cal. Feb. 15, 2011) (“Since a transfer in interest is the aim of
a foreclosure, and not a collection of debt, the foreclosure
proceeding is not a debt collection action under the FDCPA.”);
Aniel v. T.D. Serv. Co., No. C 10–03185 JSW, 2010 WL 3154087, at
*1 (N.D. Cal. Aug. 9, 2010) (“[A]llegations relating to the FDCPA
claim relate to foreclosure proceedings and courts throughout
this circuit have concluded that foreclosure does not constitute
‘debt collection’ under the FDCPA.”).
In any event, insofar as the subject of the judicial
and non-judicial foreclosures was a rental property, any related
collection efforts are not actionable under the FDCPA with
respect to any of the named Plaintiffs.
15 U.S.C. § 1692a(5).
Here, the evidence shows that the property was not used primarily
for personal, family, or household purposes.
Plaintiffs did not
use the property as a primary residence, but intended for the
property’s rental income to provide a source of funding for
personal expenses.
See, e.g., Aniel v. TD Serv. Co., No. C
10–05323 WHA, 2011 WL 109550, at *4 (N.D. Cal. Jan. 13, 2011)
(“This action arises out of a mortgage loan on a rental property,
and that loan is not a ‘debt’ covered by the FDCPA.”); Johnson v.
Wells Fargo Home Mortg., Inc., No. 3:05-CV-0321-RAM, 2007 WL
3226153, at *9 (D. Nev. Oct. 29, 2007) (“The two loans at issue
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were used to acquire two residential investment properties in
order to collect rental payments.
Plaintiff has not used either
of these rental properties for his personal residence or for any
other personal, family or household purpose.
Furthermore,
Plaintiff cites to no authority supporting the proposition that
obtaining rental properties, which he does not occupy, but merely
uses to collect rental payments, is still consumer in nature
because he uses the properties for retirement planning.
Under
these facts, Plaintiff’s debt is business in nature, not consumer
in nature.”).
In sum, Plaintiffs cannot maintain an FDCPA claim as a
matter of law.
Accordingly, the Court concludes that all
Defendants are entitled to summary judgment on Plaintiffs’ FDCPA
claim.
B.
The Motions are GRANTED as to Count I.
State Law Claims (Counts II, III, IV)
Given the Court’s grant of summary judgment on the lone
federal claim, the only claims remaining are state law claims
over which the Court has only supplemental jurisdiction.
Under
28 U.S.C. § 1367(c)(3), “district courts may decline to exercise
supplemental jurisdiction . . . if . . . the district court has
dismissed all claims over which it has original jurisdiction[.]”
“[W]hen deciding whether to exercise supplemental jurisdiction,
‘a federal court should consider and weigh in each case, and at
every stage of the litigation, the values of judicial economy,
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convenience, fairness, and comity.’”
City of Chicago v. Int’l
Coll. of Surgeons, 522 U.S. 156, 173 (1997) (quoting
Carnegie–Mellon Univ. v. Cohill, 484 U.S. 343, 350 (1988)).
State courts have the primary responsibility for
developing and applying state law, and the Court finds that “the
values of judicial economy, convenience, fairness and comity” do
not favor retaining jurisdiction in this case.
Acri v. Varian
Assocs., Inc., 114 F.3d 999, 1001 (9th Cir. 1997) (en banc)
(providing that “in the usual case in which all federal-law
claims are eliminated before trial, the balance of factors will
point towards declining to exercise jurisdiction over the
remaining state-law claims” (quoting Carnegie–Mellon Univ., 484
U.S. at 350 n.7)).
The Court declines to exercise supplemental
jurisdiction over the state law claims alleged in Plaintiffs’
Complaint.
Those claims are matters for state courts.
Moreover,
judicial economy does not favor retaining jurisdiction.
See Otto
v. Heckler, 802 F.2d 337, 338 (9th Cir. 1986) (“[T]he district
court, of course, has the discretion to determine whether its
investment of judicial energy justifies retention of jurisdiction
or if it should more properly dismiss the claims without
prejudice.”).
In short, judicial economy, convenience, fairness, and
comity weigh in favor of declining jurisdiction over Plaintiffs’
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state law claims.
The Motions are HEREBY GRANTED with respect to
Counts II, III, and IV, and those claims are DISMISSED.
CONCLUSION
On the basis of the foregoing, (1) Defendant Philip S.
Nerney’s Motion for Partial Summary Judgment as to Count I and to
Dismiss Counts III & IV of the Complaint Filed June 20, 2012,
filed October 24, 2012; (2) Nerney’s Motion to Strike Concise
Statement in Opposition to Motion and Memorandum in Opposition to
Motion, filed January 14, 2013; and (3) Defendants AOAO of Lihue
Townhouse, RE3, LLC, Real Estate Services, Wayne Richardson, and
Karen Rebecca Sakimae’s Joinders are HEREBY GRANTED.
There being
no remaining federal claims and no other basis for federal
jurisdiction, the Court declines to assert supplemental
jurisdiction over the remaining state law claims.
Court is directed to terminate this action.
IT IS SO ORDERED.
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The Clerk of
DATED AT HONOLULU, HAWAII, March 29, 2013.
/S/ Leslie E. Kobayashi
Leslie E. Kobayashi
United States District Judge
SUZANNE M. KITAMURA, ET AL. V. AOAO LIHUE TOWNHOUSE, ET AL; CIVIL
NO. 12-00353 LEK-BMK; ORDER GRANTING (1) DEFENDANT PHILIP S.
NERNEY’S MOTION FOR PARTIAL SUMMARY JUDGMENT AS TO COUNT I AND TO
DISMISS COUNTS III & IV OF THE COMPLAINT FILED JUNE 20, 2012;
(2) DEFENDANT PHILIP S. NERNEY’S MOTION TO STRIKE CONCISE
STATEMENT IN OPPOSITION TO MOTION AND MEMORANDUM IN OPPOSITION TO
MOTION; AND (3) DEFENDANTS AOAO OF LIHUE TOWNHOUSE, RE3, LLC,
REAL ESTATE SERVICES, WAYNE RICHARDSON, AND KAREN REBECCA
SAKIMAE’S SUBSTANTIVE JOINDER
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