Niutupuivaha et al v. Wells Fargo Bank, N.A. et al
Filing
43
ORDER GRANTING DEFENDANTS' MOTION TO DISMISS FIRST AMENDED COMPLAINT 36 . Signed by JUDGE LESLIE E. KOBAYASHI on 11/26/2013. ~ Defendants' Motion to Dismiss First Amended Complaint, filed October 2, 2013, is HEREBY GRANTED, and this Court HEREBY DISMISSES all of Plaintiffs' claims against Wells Fargo and MERS WITH PREJUDICE. (ecs, )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
ULUAMA NIUTUPUIVAHA and LUISA )
NIUTUPUIVAHA,
)
)
)
Plaintiffs,
)
vs.
)
)
WELLS FARGO BANK, N.A.;
)
COUNTRYWIDE HOME LOANS, INC., )
BANK OF AMERICA; CHASE BANK; )
)
MORTGAGE ELECTRONIC
)
REGISTRATION SYSTEMS, INC.;
)
NEWYORK, RASC SERIES, TRUST
HOME EQUITY MORTGAGE and DOES )
)
1-100,
)
)
Defendants.
_____________________________ )
CIVIL NO. 13-00172 LEK-KSC
ORDER GRANTING DEFENDANTS’ MOTION
TO DISMISS FIRST AMENDED COMPLAINT
On October 2, 2013, Defendants Wells Fargo Bank, N.A.
(“Wells Fargo”) and Mortgage Electronic Registration Systems,
Inc. (“MERS”, collectively “Defendants”) filed the instant Motion
to Dismiss First Amended Complaint (“Motion”).
[Dkt. no. 36.1]
Plaintiffs Uluama Niutupuivaha and Luisa Niutupuivaha
(“Plaintiffs”) filed their memorandum in opposition on
October 28, 2013, and Defendants filed their reply on November 4,
2013.
[Dkt. nos. 40, 41.]
November 18, 2013.
This matter came on for hearing on
Appearing on behalf of Defendants was
Edmund Saffery, Esq., and appearing on behalf of Plaintiffs was
1
Defendants also filed an Errata to the Motion on
October 2, 2013. [Dkt. no. 39.]
Bruce Jorgensen, 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, who were proceeding pro se at the time,
filed their Complaint in the instant action on December 31, 2012
in the Circuit Court of the First Circuit, State of Hawai`i as
Civil no. 12-1-3325-12, against Wells Fargo, Country Wide Home
Loans, Inc. (“Countrywide”), Bank of America (“BoA”), Chase Bank
(“Chase”), MERS, and New York, Rasc Series, Trust Home Equity
Mortgage (“Home Mortgage”).2
(Complaint).]
[Notice of Removal, Exh. A
The Complaint alleged the following claims:
(1) quiet title against all defendants (“Count I”); (2) wrongful
sale of property against Wells Fargo (“Count II”); (3) fraud
against all defendants (“Count III”); (4) predatory loan against
all defendants (“Count IV”); (5) breach of contract against all
defendants (“Count V”); and (6) improper securitization3 against
2
Besides Wells Fargo and MERS, there is no evidence that
Plaintiffs served the other defendants with the Complaint or the
First Amended Complaint.
3
Although Plaintiffs titled Count VI “violation of pooling
and securitization”, Count VI only addressed the securitization
process, not a violation of a pooling and services agreement
(“PSA”), as other plaintiffs in similar cases have alleged.
Defendants, however, treated Count VI as if it argued a violation
of the PSA.
2
Wells Fargo (“Count VI”).
The relevant factual allegations and procedural history
in this case are set forth in this Court’s Order Granting
Defendants Wells Fargo Bank and Mortgage Electronic Registration
Systems, Inc.’s Motion to Dismiss Complaint, filed July 22, 2013
(“the 7/22/13 Order” and “the First Motion to Dismiss”).
nos. 7, 26.4]
[Dkt.
The 7/22/13 Order dismissed Counts IV and VI with
prejudice and dismissed Counts I, II, III, and V without
prejudice.
This Court gave Plaintiffs leave to submit a motion
to the magistrate judge seeking permission to file an amended
complaint consistent with the terms of the 7/22/13 Order.
2013
WL 3819600, at *16.
Plaintiffs filed the motion on August 12, 2013, and the
magistrate judge orally granted the motion on September 12, 2013.
[Dkt. nos. 27 (motion), 31 (minutes of hearing).5]
Plaintiffs
filed their First Amended Complaint on September 18, 2013.
no. 33.]
[Dkt.
The First Amended Complaint alleges the following
claims: wrongful sale of property (“Amended Count I”); fraud
(“Amended Count II”); and breach of contract (“Amended Count
III”).
4
The First Amended Complaint prays for the following
The 7/22/13 Order is also available at 2013 WL 3819600.
5
The magistrate judge filed the Order Granting Plaintiffs’
Motion for Leave to File First Amended Complaint, which
Plaintiffs’ counsel drafted, on September 20, 2013. [Dkt. no.
35.]
3
relief: general, special, incidental, consequential, and
compensatory damages; punitive and exemplary damages; reasonable
attorney’s fees and costs; prejudgment interest; and any other
appropriate relief.
The factual basis of the First Amended Complaint is,
for the most part, the same as the factual basis of the original
Complaint, but the First Amended Complaint includes some
additional details.
In addition to general information about the
terms and history of Plaintiffs’ loans, the First Amended
Complaint includes the name of the person who allegedly
negotiated Plaintiffs’ refinancing loans with Countrywide and
Wells Fargo/MERS, Robert Reid.
Plaintiffs allege that Reid and
other employees of the lenders told them that, if they had
difficulty making their monthly payments, they would be able to
refinance their loans again as property values increased.
[First
Amended Complaint at ¶¶ 12-13.]
Amended Count I alleges that, at the time Countrywide
assigned Plaintiffs’ $250,000.00 loan to BoA and Chase, “one or
all of the above entities no longer existed, or otherwise did not
possess valid assignments of the loan at the time a public sale
of the property was conducted.”
[Id. at ¶ 18.6]
6
Thus,
The original Complaint alleged that Wells Fargo conducted
a non-judicial foreclosure on Plaintiffs’ property “claiming a
beneficial interest in the promissory notes and mortgages and
sold the property to themselves without the legal right to do so
(continued...)
4
Plaintiffs allege that Chase wrongfully foreclosed on that loan.
Plaintiffs also had a $150,000 loan with Defendants.
[Id. at ¶ 12.]
Plaintiffs allege that the foreclosure sale by
Defendants was invalid because: Defendants made fraudulent
representations to Plaintiffs in the foreclosure process;
Defendants did not comply with Haw. Rev. Stat. Chapter 667; and
in or around 2010, Defendants purchased Chase’s invalid interest
in Plaintiffs’ loans.
[Id. at ¶ 19.]
Amended Count II relies on the same allegations as the
fraud claim in the original Complaint.
Plaintiffs originally
alleged:
The Defendants Countrywide Home Loans and
other defendants represented to Plaintiffs when
they took out the loans that the equity in their
home would increase and not to worry about making
payments, that they could always refinance the
property if need be, and after a default notice
was sent, Wells Fargo Bank confirmed this and said
Plaintiffs could buy the property back or
refinance the property after the foreclosure
sale . . . .
[Complaint at ¶ 14.]
The First Amended Complaint alleges that
Reid, as an agent of Countrywide and Wells Fargo, made the
representation during the original loan application process that
refinancing would always be available.
Plaintiffs allege that
Reid made this representation even though Countrywide and Wells
6
(...continued)
and without valid assignments or promissory notes[.]”
at ¶ 12.]
5
[Complaint
Fargo knew, or should have known, that the representation was
false and that Plaintiffs would detrimentally rely on the
representation by refinancing their loans.
The First Amended
Complaint alleges that Plaintiffs were not allowed to refinance
their loans.
The First Amended Complaint also alleges that
unidentified employees of Chase and Wells Fargo told Plaintiffs
that they did not have to act upon the notice of foreclosure
because they would be able to modify their loans or repurchase
their property at a later time.
¶¶ 23-24.]
[First Amended Complaint at
In addition, the First Amended Complaint bases its
fraud claim on Defendants’ issuance of a 1099 Form for tax year
2010 in the amount of $270,457.34.
[Id. at ¶ 25.]
The First Amended Complaint bases the breach of
contract claim upon the failure to comply with the requirement in
Plaintiffs’ loan agreement with Countrywide that the lender
notify Plaintiffs of changes regarding where Plaintiffs were to
send their payments or to whom Plaintiffs were to make the
payments.
[Id. at ¶ 30.]
The First Amended Complaint clarifies
that it was “COUNTRYWIDE, and/or its successors and assigns,
including but not limited to BANK OF AMERICA, CHASE BANK and DOES
1-100” that failed to comply with this provision.
[Id.]
Defendants now seek dismissal of the First Amended
Complaint.
6
DISCUSSION
Defendants first argue that Plaintiffs’ claims are
barred by the claim preclusion doctrine because Plaintiffs should
have raised them as counterclaims in the state court ejectment
action.
This Court must look to Hawai`i law to determine whether
the judgment in the ejectment action 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.”)).
Plaintiffs, however, argue that Defendants waived
the claim preclusion argument because they did not raise it in
the First Motion to Dismiss.
I.
Waiver
Fed. R. Civ. P. 12(g)(2)7 states, “a party that makes a
motion under this rule must not make another motion under this
rule raising a defense or objection that was available to the
party but omitted from its earlier motion.”
Although Hawai`i law
governs the issue of whether the ejectment action has preclusive
effect, federal law governs the issue of whether Defendants
7
This rule is subject to two exceptions that are
inapplicable in this case.
7
waived claim preclusion as a defense.
See Bernardi v. Deutsche
Bank Nat’l Trust Co. Americas, No. C–11–05453–RMW, 2013 WL
1334266, at *4 n.3 (N.D. Cal. Mar. 29, 2013).
The district court
in Bernardi noted that, “‘[c]laim preclusion is an affirmative
defense which may be deemed waived if not raised in the
pleadings.’”
Id. at *3 (quoting Clements v. Airport Authority of
Washoe Cnty., 69 F.3d 321, 328 (9th Cir. 1995)).
As in the
instant case, the defendants in Bernardi did not raise claim
preclusion until the second motion to dismiss, and the plaintiffs
argued that the defendants waived it pursuant to Rule 12(g)(2).
Id.
The district court in Bernardi recognized that the
“defendants could have waived the defense under federal law if
they acquiesced to dual proceedings.”
omitted).
Id. at *4 (footnote
The district court distinguished Clements, where the
defendants did not raise claim preclusion until several years
after the filing of the complaint and where the Ninth Circuit
held that claim preclusion would have substantially prejudiced
the plaintiffs.
In Bernardi, the plaintiffs were not prejudiced
because the defendants raised claim preclusion in the second
motion to dismiss instead of the first because, at the time the
defendants filed the first motion to dismiss, the plaintiff could
not have amended the state court pleadings to raise the claim
they tried to raise in the federal action.
8
The district court
therefore ruled that the defendants did not waive the claim
preclusion defense.
Id. at *5-6.
Similarly, in the instant case, less than six months
passed between the filing of the First Motion to Dismiss and the
filing of the instant Motion.
Further, Plaintiffs were not
prejudiced by the failure to raise claim preclusion in the First
Motion to Dismiss because, when Defendants filed the First Motion
to Dismiss on April 19, 2013, it was already too late for
Plaintiffs to raise the claims they now bring against Defendants
in the instant case in the state court ejectment action.
The
state court issued the Judgment and the Writ of Ejectment more
than one year before Defendants filed the First Motion to
Dismiss.
This Court therefore concludes that Defendants did not
waive the claim preclusion defense by failing to raise it in the
First Motion to Dismiss.
This Court now turns to the merits of
Defendants’ claim preclusion defense.
II.
Elements of Claim Preclusion
This Court has stated:
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
. . . all grounds of claim and defense which
might have been properly litigated in the
[prior] action.” See Aganos v. GMAC
9
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).
Ounyoung v. Fed. Home Loan Mortg. Corp., 2012 WL 5880673, at *4
(D. Hawai`i Nov. 21, 2012) (quoting 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)).
A.
Final Judgment
According to the docket sheet in the ejectment action,
the state circuit court granted summary judgment in favor of
Wells Fargo on February 29, 2012 and issued a Judgment and a Writ
of Ejectment on the same day.
Plaintiffs could have appealed
from the order granting summary judgment, the judgment, and the
writ of ejectment.
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
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summary judgment orders, judgment of possession/ejectment, and
writ of possession/ejectment).
Plaintiffs, however, did not file a notice of appeal
within thirty days from the entry of judgment.
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.”).
In March 2013, Plaintiffs moved
for a stay of the Writ of Ejectment pending the resolution of the
instant case.
Such a stay, however, does not extend the time for
Plaintiffs to file an appeal from the Judgment.
The Court
therefore finds that there was a final judgment in the ejectment
action for purposes of Defendants’ claim preclusion defense.
See
Radford, 2011 WL 4054863, at *8.
B.
Identity of the Parties
Second, in order for 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 Wells Fargo 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
“pellucid” where the same parties to the state foreclosure
proceeding appeared in a federal action)).
11
MERS was not a party to the ejectment action.8
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 judicata.
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)).
Based on the
allegations in the First Amended Complaint, this Court finds that
the relationship between Wells Fargo and MERS is close enough to
establish privity between them.
See, e.g., First Amended
Complaint at ¶ 15 (“WELLS FARGO/MERS conducted a non-judicial
foreclosure of the property and then purchased the property on or
around March 23, 2010 in the amount of $106,206.” (emphasis in
original)).
This Court therefore finds that the identity of the
parties requirement is satisfied as to both Defendants.
C.
Identical Claims
The final requirement for claim preclusion is that the
claim that was decided in the ejectment action must be identical
to the one presented in the instant case.
8
See Radford, 2011 WL
This Court will not consider Countrywide, BoA, or Chase in
the claim preclusion analysis because Plaintiffs never completed
service on them. The First Amended Complaint did not include
Home Mortgage as a defendant.
12
4054863, at *9.
“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
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 with Defendants, the foreclosure on the
property, and the purported new title-holder’s attempt to take
possession of the property.
Although Plaintiffs’ current claims
challenging Wells Fargo’s title to the property were not actually
litigated or decided in the ejectment action, because Plaintiffs
could have raised these claims in the ejectment action, this
Court finds that the identical claims requirement of the claim
preclusion doctrine is satisfied.
See Radford, 2011 WL 4054863,
at *9 (citing Albano, 244 F.3d at 1064; Bremer, 104 Haw. at 53,
13
85 P.3d at 160).
This Court finds that all of the requirements of the
claim preclusion doctrine are satisfied as to Defendants, and
therefore all of Plaintiffs’ claims against Defendants in the
instant case are barred by the claim preclusion effect of the
ejectment action.
This Court expresses no opinion as to the
merits of Plaintiffs’ claims against Countrywide, BoA, and Chase.
Insofar as all of Plaintiffs’ claims against Defendants 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 First Amended Complaint, filed October 2, 2013, is HEREBY
GRANTED, and this Court HEREBY DISMISSES all of Plaintiffs’
claims against Wells Fargo and MERS WITH PREJUDICE.
IT IS SO ORDERED.
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DATED AT HONOLULU, HAWAII, November 26, 2013.
/s/ Leslie E. Kobayashi
Leslie E. Kobayashi
United States District Judge
ULUAMA NIUTUPUIVAHA, ET AL. V. WELLS FARGO BANK, ET AL; CIVIL NO.
13-00172 LEK-KSC; ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS
FIRST AMENDED COMPLAINT
15
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