Lima et al v. Deutsche Bank National Trust Company et al
Filing
329
ORDER GRANTING SUMMARY JUDGMENT IN FAVOR OF DEFENDANT BANKS re 238 . Signed by JUDGE SUSAN OKI MOLLWAY on 10/8/2021.The motions for summary judgment (Lima, ECF No. 238; Gibo, ECF No. 260; Bald, ECF No. 170) are reinstated and granted. The Clerk of Court is directed to enter judgment in favor of the Defendant Banks and to close these cases. (cib)COURTS CERTIFICATE OF SERVICE - Non-Registered CM/ECF Participants have been served by First Class Mail to the addresses of record listed on the (NEF). Pro Se (Non-Prisoner) Litigants that have consented to receive documents and Notices of Electronic Filings by email, have been served electronically at the e-mail address listed on the (NEF)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
LIONEL LIMA, JR., et al.,
)
individually and on behalf of )
all others similarly
)
situated,
)
)
Plaintiffs,
)
)
vs.
)
)
DEUTSCHE BANK NATIONAL TRUST )
COMPANY,
)
)
Defendant.
)
_____________________________ )
EVELYN JANE GIBO, et al.,
)
individually and on behalf of )
all others similarly
)
situated,
)
)
Plaintiffs,
)
)
vs.
)
)
U.S. BANK NATIONAL
)
ASSOCIATION,
)
)
Defendant.
)
_____________________________ )
DAVID EMORY BALD, et al.,
)
individually and on behalf of )
all others similarly
)
situated,
)
)
Plaintiffs,
)
)
vs.
)
)
WELLS FARGO BANK, N.A.,
)
)
Defendant.
)
_____________________________ )
Civ. No. 12-00509 SOM-WRP
ORDER GRANTING SUMMARY
JUDGMENT IN FAVOR OF
DEFENDANT BANKS
Civ. No. 12-00514 SOM-WRP
ORDER GRANTING SUMMARY
JUDGMENT IN FAVOR OF
DEFENDANT BANKS
Civ. No. 13-00135 SOM-RT
ORDER GRANTING SUMMARY
JUDGMENT IN FAVOR OF
DEFENDANT BANKS
ORDER GRANTING SUMMARY JUDGMENT IN FAVOR OF DEFENDANT BANKS
I.
INTRODUCTION.
Before the court are three cases that present an
identical dispositive issue: 1) Lima, et al. v. Deutsche Bank
National Trust Company, Civ. No. 12-00509 SOM-WRP; 2) Gibo, et
al. v. U.S. Bank National Association, Civ. No. 12-00514 SOM-WRP;
and 3) Bald, et al. v. Wells Fargo Bank, N.A., Civ. No. 13-00135
SOM-RT.
While the cases have not been consolidated, this court
issues a single order for purposes of judicial economy.
This
court had previously paused these cases and terminated summary
judgment motions filed in each case pending an answer from the
Hawaii Supreme Court to a question certified by this court.
Having received an answer, this court now reinstates the summary
judgment motions (Lima, ECF No. 238; Gibo, ECF No. 260; Bald, ECF
No. 170) at the request of the movants (“Defendant Banks”).
Each case was styled as a class action arising out of
nonjudicial foreclosures in which the respective Plaintiffs
claimed that a Defendant Bank from which Plaintiffs had borrowed
money failed to follow the requirements for such foreclosures.
Plaintiffs asserted claims of wrongful foreclosure and unfair and
deceptive acts and practices (“UDAP”).
Given the Hawaii Supreme
Court’s answer to the certified question, there is no genuine
issue of fact with respect to Plaintiffs’ failure to prove that
they sustained damages.
Accordingly, summary judgment is granted
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in favor of Defendant Banks in all three cases.
Because this
court grants summary judgment in favor of Defendant Banks, this
court need not reinstate or address the merits of any other
motion that had not received a substantive ruling as of the time
this court certified its question to the Hawaii Supreme Court.
Those other motions are rendered moot by the present order.
II.
BACKGROUND.
These three putative class actions1 have proceeded in a
parallel manner.
Filed in 2012 in state court and removed to
federal court, these cases have lengthy histories, which the
court summarized in its Order Certifying a Question to the Hawaii
Supreme Court, 2019 WL 2146585 (D. Haw. May 16, 2019).
That
history is incorporated by reference.
There is no dispute that, in each of the three removed
cases, Plaintiffs borrowed money from Defendant Banks in
connection with real estate holdings.
Nor is there any dispute
that each Plaintiff defaulted on his or her mortgage and had
significant mortgage debt.
See Lima et al. v. Deutshe Bank Nat’l
Trust Co., et al., 2021 WL 4058368, at *8.
Plaintiffs sued their respective banks, asserting
violations of the mortgagees’ power-of-sale clause, violations of
section 667-5 of Hawaii Revised Statutes, and UDAP claims under
section 480-2 of Hawaii Revised Statutes.
1
No class has been certified.
3
Lima, ECF No. 1-2
(copy of First Amended Complaint attached to Notice of Removal);
Gibo, ECF No. 1-2 (copy of First Amended Complaint attached to
Notice of Removal); Bald, ECF No. 1-3 (copy of Complaint attached
to Notice of Removal).
dismiss in each case.
In 2013, the court granted motions to
See Lima v. U.S. Nat’l Bank Trust Co, et
al., 943 F. Supp. 2d 1093 (2013) (Order Granting Defendants’
Motions to Dismiss in Lima and Gibo); Bald v. Wells Fargo Bank,
2013 WL 3864449, at *1 (D. Haw. July 25, 2013).
Plaintiffs
appealed.
While the three cases were on appeal, the Hawaii
Supreme Court decided Hungate v. Law Office of David B. Rosen,
139 Haw. 394, 391 P.3d 1 (2017).
In light of Hungate, the Ninth
Circuit reversed in part and remanded the cases to this court.
Lima, et al. v. Deutsche Bank Nat'l Tr. Co., 690 F. App’x 911
(9th Cir. 2017) (consolidated Lima and Gibo decision); Bald v.
Wells Fargo Bank, N.A., 688 F. App’x 472 (9th Cir. 2017).
On remand, this court gave Plaintiffs leave to file
amended complaints.
In each amended complaint, Plaintiffs have
asserted: (1) a wrongful foreclosure tort claim, and (2) UDAP and
unfair method of competition (“UMOC”) claims under section 480-2.
See Lima, ECF No. 182, PageID #s 6550, 6564 (Copy of Second
Amended Complaint); Gibo, ECF No. 196, PageID #s 6530, 6541
(Copy of Second Amended Complaint); Bald, ECF No. 99, PageID
# 2604 (Copy of First Amended Complaint).
4
Defendant Banks filed motions for summary judgment in
each case, arguing, among numerous other things, that Plaintiffs’
claims failed because they could not prove the harm element of
either their wrongful foreclosure claim or their section 480-2
claim.
170.
See Lima, ECF No. 238; Gibo, ECF No. 260; Bald, ECF No.
Defendant Banks argued that, even assuming that they had
engaged in the alleged practices and that those practices
violated the powers of sale and the statutes governing
nonjudicial foreclosure proceedings, Plaintiffs had failed to
offer any evidence that they had suffered any harm as a result of
the practices.
See Lima, ECF No. 238-1, PageID #s 10587-10600,
10601-02, 10610-11; Gibo, ECF No. 260-1, PageID #s 11081-94,
11095-96, 11104-05; Bald, ECF No. 170-1, PageID #s 3295-3300.
Plaintiffs responded that evidence that they had lost
title, possession, and the value of their investments sufficed to
establish harm and to survive summary judgment.
See Lima, ECF
No. 247, PageID #s 13966-80; Gibo, ECF No. 268, PageID #s
13125-39; Bald, ECF No. 185, PageID #s 4704-13.
Plaintiffs
pointed to the foreclosure sales as having deprived them of title
to and possession of their properties.
According to Plaintiffs,
any decrease in a mortgage debt resulting from a foreclosure sale
was irrelevant to Plaintiffs’ prima facie case and would be in
issue at trial only after Defendant Banks’ liability had been
established.
That is, Plaintiffs viewed their delinquent
mortgages (which exceeded what the properties sold for at
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foreclosure) as only setoffs that Defendant Banks could assert by
way of an affirmative defense to damage claims.
Plaintiffs
therefore presented no evidence with respect to the effect of the
mortgage debt on the monetary value of any lost title and
possession, or on the value of their investment.
After a hearing on the summary judgment motions, this
court certified the following question to the Hawaii Supreme
Court:
When (a) a borrower has indisputably
defaulted on a mortgage for real property,
(b) a lender has conducted a nonjudicial
foreclosure sale but has not strictly
complied with the requirements governing such
sales, and (c) the borrower sues the lender
over that noncompliance after the foreclosure
sale and, if the property was purchased at
foreclosure by the lender, after any
subsequent sale to a third-party purchaser,
may the borrower establish the requisite harm
for liability purposes under the law of
wrongful foreclosure and/or section 480-2 of
Hawai`i Revised Statutes by demonstrating the
loss of title, possession, and/or investments
in the property without regard to the effect
of the mortgage on those items?
See 2019 WL 2146585 at *1.
This court noted:
The gist of the above question may be
restated (assuming but not including the
underlying factual predicates) as a question
about which party has the burden of proof:
Is the effect of the mortgage
considered only as a matter of
setoff that a lender has the burden
of proving after the borrower
establishes the amount of the
borrower’s damages, or does a
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borrower with no preforeclosure
rights in property except as
encumbered by a mortgage bear the
burden of accounting for the effect
of the mortgage in establishing the
element of harm in the liability
case?
Id.
In Footnote 7 of this court’s certified question, this
court noted that Plaintiffs had “phrased” their section 480-2
claims as both UDAP and UMOC claims, but that they had not made
separate arguments distinguishing their UDAP claims from their
UMOC claims.
Id. at *4 n.7.
This court therefore treated the
UDAP and UMOC claims as UDAP claims, stating that Plaintiffs’
claims were for the tort of wrongful foreclosure and UDAP in
violation of section 480-2.
Id. at *1.
Plaintiffs have not
challenged this characterization, and the Hawaii Supreme Court
and this court have treated Plaintiffs’ UDAP and UMOC claims as
merged and as subject to UDAP principles.
This court stayed proceedings in each case and
terminated the respective motions for summary judgment pending an
answer from the Hawaii Supreme Court, telling the parties that
they could reinstate the motions for summary judgment by
informing the court in writing that the motions should be
reinstated.
Id. at *14.
On September 3, 2021, the Hawaii Supreme Court answered
the certified question.
See Lima et al. v. Deutshe Bank Nat’l
Trust Co., et al., 2021 WL 4058368.
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The Hawaii Supreme Court
noted that Plaintiffs had not directly addressed this court’s
certified question and had instead argued that Defendant Banks
bore the burden of demonstrating the impact of the mortgage debt.
Id. at *3.
The Hawaii Supreme Court began its analysis by noting
that Plaintiffs bore the burden of establishing all necessary
elements of their claims.
Id. at *5.
It then stated:
Plaintiff Borrowers raised two claims in the
underlying proceedings: a wrongful
foreclosure claim and a UDAP claim. In order
to establish a prima facie case that
Defendant Banks are liable for wrongful
foreclosure, Plaintiff Borrowers must
establish “(1) a legal duty owed to the
mortgagor by the foreclosing party; (2) a
breach of that duty; (3) a causal connection
between the breach of that duty and the
injury sustained; and (4) damages.” Bank of
America, N.A. v. Reyes-Toledo, 143 Hawai`i
249, 264 n.12, 428 P.3d 761, 776 n.12 (2018).
To establish a prima facie case for a UDAP
claim, Plaintiff Borrowers must establish
“(1) either that the defendant violated the
UDAP statute (or that its actions are deemed
to violate the UDAP statute by another
statute), (2) that the consumer was injured
as a result of the violation, and (3) the
amount of damages sustained as a result of
the UDAP violation.” Kawakami v. Kahala Hotel
Investors, LLC, 142 Hawai`i 507, 519, 421
P.3d 1277, 1289 (2018) (citations omitted).
Thus, in order to survive a motion for
summary judgment on their claims, Plaintiff
Borrowers must adduce evidence that they have
suffered damages. See Exotics Hawai‘i-Kona[,
Ind. v. E.I. Du Pont De Nemours & Co.], 116
Hawai`i at 302, 172 P.3d at 1046
2021 WL 4058368, at *5.
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The Hawaii Supreme Court ruled that Plaintiffs were
required to demonstrate a right to compensatory damages for their
wrongful foreclosure and section 480-2 claims.
Nominal and
punitive damages were not enough, by themselves, to satisfy the
harm element of the claims.
Id. at *6.
The Hawaii Supreme Court
concluded that Plaintiffs’ identified damages of interest, lossof-use payments, and past payments, were insufficient under
Hawaii law to establish that they had sustained damages, given
their failure to account for their mortgage debts.
Id. at *7.
According to the Hawaii Supreme Court, Plaintiffs “must make a
prima facie case that their requested damages will restore them
to their pre-tort position to survive summary judgment.”
Id.
Plaintiffs who did not account for their pre-tort
positions (which involved having defaulted on their loans and
owing substantial debt to Defendant Banks) would not satisfy the
damage elements of their claims.
Id.
Plaintiffs had conceded
that, prior to the nonjudicial foreclosures, their properties had
been encumbered by mortgages that they were unable to repay.
The
Hawaii Supreme Court held that those debts had to be considered
as part of what Plaintiffs’ positions were before any alleged
injury.
Id. at *8.
“Plaintiff Borrowers’ failure to account for
such sums makes it impossible for the trier of fact to determine
what damages would restore Plaintiff Borrowers to their
pre-foreclosure positions.”
Id.
In other words, Plaintiffs had
the burden of demonstrating that, after accounting for the effect
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of their mortgages, they had suffered compensable harm.
*10.
Id. at
Plaintiffs’ failure to meet that burden is dispositive, or,
as the Hawaii Supreme Court put it, “determinative of the cause.”
See id. at *5.
On October 4, 2021, Defendant Banks asked this court to
reinstate their summary judgment motions and to grant their
summary judgment motions in light of the Hawaii Supreme Court’s
answer to the certified question.
ECF No. 335; Bald, ECF No. 233.
See Lima, ECF No. 328; Gibo,
On October 4, 2021, Plaintiffs
similarly stated that the court “should have all the facts and
law that it needs to rule on all the pending motions.”
See Lima,
ECF No. 327, PageID # 18018; Gibo, ECF No. 334, PageID
#16096;
Bald, ECF No. 234, PageID # 6753.
These filings make it clear
that the parties agree that the record is complete and that no
further submissions are necessary for this court to rule.
Plaintiffs have made no attempt to account for their mortgage
debt in opposing the present motions, a fatal omission under the
reasoning presented by the Hawaii Supreme Court in its response
to this court’s certified question.
It appears that Plaintiffs
cannot establish their damages when their mortgage debt is taken
into account.
In their submissions on October 4, 2021, Plaintiffs
suggest that this court order a settlement conference.
Parties
are always free without a court order to seek a settlement
conference, usually with a magistrate judge.
10
This court notes
that the parties have been engaged in some settlement
discussions, as shown by the series of orders removing class
members because of partial settlements.
In fact, this court had
wondered whether the parties on their own might have been
discussing settlement of these three cases as a whole in the
month since the Hawaii Supreme Court issued its order.
If not,
this case has run so long that conclusion by way of prompt order
seems the best way to proceed at this point.
III.
SUMMARY JUDGMENT STANDARD.
Under Rule 56 of the Federal Rules of Civil Procedure,
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.”
P. 56(a).
Fed. R. Civ.
See Addisu v. Fred Meyer, Inc., 198 F.3d 1130, 1134
(9th Cir. 2000).
Summary judgment movants must support their
position concerning whether a material fact is genuinely disputed
by either “citing to particular parts of materials in the record,
including depositions, documents, electronically stored
information, affidavits or declarations, stipulations (including
those made for the purposes of the motion only), admissions,
interrogatory answers, or other materials”; or “showing that the
materials cited do not establish the absence or presence of a
genuine dispute, or that an adverse party cannot produce
admissible evidence to support the fact.”
Fed. R. Civ. P. 56(c).
One of the principal purposes of summary judgment is to identify
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and dispose of factually unsupported claims and defenses.
Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986).
Summary judgment must be granted against a party that
fails to demonstrate facts to establish what will be an essential
element at trial.
See id. at 323.
A moving party without the
ultimate burden of persuasion at trial--usually, but not always,
the defendant--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 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).
“When the moving party has carried its burden
under Rule 56(c), its opponent 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.
Elec. Serv., 809 F.2d at 630.
T.W.
At least some “‘significant
probative evidence tending to support the complaint’” must be
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produced.
Id. (quoting First Nat’l Bank of Ariz. v. Cities Serv.
Co., 391 U.S. 253, 290 (1968)).
IV.
ANALYSIS.
Given the Hawaii Supreme Court’s answer to this court’s
certified question, the analysis with respect to Defendant Banks’
motions for summary judgment (Lima, ECF No. 238; Gibo, ECF No.
260; Bald, ECF No. 170) is straightforward.
Plaintiffs have not
put forth any evidence demonstrating that, when their outstanding
debt is taken into account, they can prove compensatory damages.
Under the Hawai Supreme Court’s guidance, Plaintiffs cannot
survive Defendant Banks’ motions for summary judgment.
Accordingly, summary judgment is granted in favor of Defendant
Banks.
As the Hawaii Supreme Court noted, Plaintiffs have the
burden of demonstrating every element of their wrongful
foreclosure and section 480-2 claims, including the existence of
the compensable damages they sustained.
*6.
2021 WL 4058368, at *5-
At best, Plaintiffs have identified damages arising out of
interest, loss-of-use payments, and past payments.
But, the
Hawaii Supreme Court notes, these are not sufficient to establish
Plaintiffs’ damages under the circumstances.
Id. at *7.
Plaintiffs have never denied that, prior to the nonjudicial
foreclosures, their properties were encumbered by mortgages that
they could not repay.
Those debts were part of their financial
circumstances before any injury, and it was their obligation to
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account for those debts in their case in chief.
Id. at *7-*8.
The Hawaii Supreme Court has made clear that the failure to meet
that obligation is determinative of the summary judgment motions.
Plaintiffs cannot raise a genuine issue of fact with respect to
compensatory damages without showing that, when their debts are
taken into account, they have suffered harm.
With the Hawaii Supreme Court’s answer to this court’s
certified question in hand, Plaintiffs are not asserting that
they can establish damages even if they account for their
mortgage debts.
Under these circumstances, Plaintiffs’ wrongful
foreclosure and section 480-2 claims fail for want of evidence
concerning their damages.
Summary judgment is granted in favor of Defendant
Banks.
V.
CONCLUSION.
The motions for summary judgment (Lima, ECF No. 238;
Gibo, ECF No. 260; Bald, ECF No. 170) are reinstated and granted.
The Clerk of Court is directed to enter judgment in favor of the
Defendant Banks and to close these cases.
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IT IS SO ORDERED.
DATED: Honolulu, Hawaii, October 8, 2021.
/s/ Susan Oki Mollway
Susan Oki Mollway
United States District Judge
Lima, et al. v. Deutsche Bank National Trust Company, Civ. No. 12-00509 SOM-WRP; Gibo,
et al. v. U.S. Bank National Association, Civ. No. 12-00514 SOM-WRP; and Bald, et al.
v. Wells Fargo Bank, N.A., Civ. No. 13-00135 SOM-RT; ORDER GRANTING SUMMARY JUDGMENT
IN FAVOR OF DEFENDANT BANKS
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