Mather v. First Hawaiian Bank et al

Filing 28

ORDER DISMISSING COMPLAINT re 9 - Signed by CHIEF JUDGE SUSAN OKI MOLLWAY on 6/24/2014. "The court dismisses Mather's Complaint but gives her leave to file an Amended Complaint no later than July 11, 2014." (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). Diane E. Mather served by first class mail at the address of record on June 24, 2014.

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
DIANE E. MATHER, individually
and as trustee of the
HANA2008 LIVING TRUST and the
VIOLET BLACK TRUST,

)
)
)
)
)
Plaintiffs,
)
)
vs.
)
)
FIRST HAWAIIAN BANK, a Hawaii )
corporation,
)
)
Defendant.
)
_____________________________ )

CIVIL NO. 14-00091 SOM/RLP
ORDER DISMISSING COMPLAINT

ORDER DISMISSING COMPLAINT
I.

INTRODUCTION.
On February 25, 2014, Plaintiff Diane E. Mather filed

the Complaint in this action, naming First Hawaiian Bank, which
is a Hawaii corporation, as the sole Defendant.

Mather asserts

various claims arising out of several loans First Hawaiian Bank
made to her that First Hawaiian Bank has foreclosed on.

These

claims include claims under the Truth and Lending Act and the
Real Estate Settlement Procedures Act, as well as various statelaw causes-of-action.
The court dismisses the Complaint because Mather’s
federal question claims are barred by the applicable limitations
periods and because the court declines to exercise supplemental
jurisdiction over Mather’s remaining state-law claims.

II.

BACKGROUND FACTS.
Although Mather’s Complaint is 49 pages long, it is

practically devoid of any factual allegations and clearly fails
to allege facts demonstrating that she is entitled to relief.
The court has gleaned the following background facts.
There is no dispute that, on or about September 25,
2008, First Hawaiian Bank lent Mather $686,000, that this loan
was secured by a note and mortgage on property located on Dole
Street in Honolulu, Hawaii, or that First Hawaiian Bank
foreclosed on this property in state court.

See Complaint ¶¶ 27,

29, 38; Findings of Fact, Conclusions of Law and Order Granting
Plaintiff’s Motion for Summary Judgment as to All Claims and All
Parties, Interlocutory Decree of Foreclosure and Order of Sale
¶ 4, Civ. No. 12-1-3080 (Haw. Cir. Ct. Aug. 23, 2013), ECF No. 911, PageID # 400 (“Interlocutory Decree of Foreclosure”).
There is also no dispute that, on or about November 5,
2008, First Hawaiian Bank extended to Mather a line of credit of
up to $20,000, that this line of credit was secured by a note and
second mortgage on the Dole Street property, or that First
Hawaiian Bank foreclosed on this line of credit in state court.
See Complaint ¶¶ 28, 29, 38; Interlocutory Decree of Foreclosure,
ECF No. 9-11, PageID # 404.
The court takes judicial notice of a state-court
special proceeding concerning the September 2008 $686,000 loan.

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On August 9, 2012, the Circuit Court of the First Circuit, State
of Hawaii, entered Findings of Fact, Conclusions of Law and Order
Grating Petitioner’s Motion for Summary Judgment and Order to
Expunge Various Instruments Against Karen Mary Schaefer, S.P. No.
12-1-0240 KKS (Haw. Cir. Ct. Aug. 9, 2012), ECF No. 9-7, PageID #
378.

In that document, the state court made a factual finding

that Mather had recorded in Hawaii’s Bureau of Conveyances a
Notice of Dishonor and Non-Response in January 2012 that claimed
that, if First Hawaiian Bank failed to respond to it within 3
days, the $686,000 note (along with another note for a separate
$224,000 loan) would be null and void.

Id., PageID # 382.

According to the state-court order, several days later, Karen
Schaefer, who is apparently a notary, recorded a Certificate of
Dishonor that claimed the notes were “null and void” and that
First Hawaiian Bank owed Mather $1,459,703.35.
# 383.

Id., PageID

According to the description in the state-court order,

Mather then filed a Satisfaction of Mortgage and a Release and
Discharge of Mortgage Lien, as well as a UCC Financing Statement
that purportedly granted her a security interest in First
Hawaiian Bank property.

See id., PageID #s 383-84.

The state-

court order expunged the various instruments filed by Shaefer.
Id., PageID # 387.
Several weeks later, Mather stipulated to having the
instruments she filed expunged.

See Stipulated Order to Expunge

3

Various Instruments, S.P. No. 12-1-0240 KKS (Haw. Cir. Ct. Aug.
30, 2012), ECF No. 9-9, PageID # 392.
In a state-court order of August 23, 2013, which was
filed after the Complaint in this matter was filed, the state
court determined that Mather had defaulted on the loans and that
First Hawaiian Bank was entitled to foreclose on its security
interest.

Interlocutory Decree of Foreclosure, ECF No. 9-11,

PageID # 408.

The state court ordered the Dole Street property

to be sold via a public action by a court-appointed commissioner.
Id., PageID # 410.

The state court further ruled that, pursuant

to Rule 54(b) of the Hawaii Rules of Civil Procedure, the
Interlocutory Decree of Foreclosure “shall be considered as a
final order and judgment and there shall be no just reason for
delay.”

Id., PageID # 413; see also Judgment re: Findings of

Fact, Conclusions of Law and Order Granting Plaintiff’s Motion
for Summary Judgment as to All Claims and All Parties,
Interlocutory Decree of Foreclosure and Order of Sale, Civ. No.
12-1-3080 (Haw. Cir. Ct. Aug. 23, 2013), ECF No. 9-12.
It appears that Mather filed a Chapter 11 bankruptcy
petition.

That bankruptcy case was dismissed because of Mather’s

failure to file required documents.

See Order Dismissing Case

with 180-Day Bar to Refiling for Failure to File Required
Documents, ECF No. 9-13, PageID # 420.

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The Dole Street property was sold at public auction to
First Hawaiian Bank, and the state court confirmed the sale.

See

Order Granting Plaintiff’s Motion for Confirmation of Sale,
Directing Distribution of Proceeds, for Deficiency Judgment, Writ
of Possession and Disposal or Personal Property, Civ. No. 12-13080 (Haw. Cir. Ct. Mar. 21, 2014), ECF No. 21-3, and Judgment
re: Order Granting Plaintiff’s Motion for Confirmation of Sale,
Directing Distribution of Proceeds, for Deficiency Judgment, Writ
of Possession and Disposal or Personal Property, Civ. No. 12-13080 (Haw. Cir. Ct. Mar. 21, 2014), ECF No. 21-4.

Mather did not

appeal the state court foreclosure proceeding orders and/or
judgments.
III.

RULE 12(b)(6) STANDARD.
Under Rule 12(b)(6) of the Federal Rules of Civil

Procedure, a court’s review of the sufficiency of a complaint is
generally limited to the contents of the complaint.

Sprewell v.

Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001);
Campanelli v. Bockrath, 100 F.3d 1476, 1479 (9th Cir. 1996).

If

matters outside the pleadings are considered, the Rule 12(b)(6)
motion is treated as one for summary judgment.

See Keams v.

Tempe Tech. Inst., Inc., 110 F.3d 44, 46 (9th Cir. 1997);
Anderson v. Angelone, 86 F.3d 932, 934 (9th Cir. 1996).

However,

courts may “consider certain materials--documents attached to the
complaint, documents incorporated by reference in the complaint,

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or matters of judicial notice--without converting the motion to
dismiss into a motion for summary judgment.”
Ritchie, 342 F.3d 903, 908 (9th Cir. 2003).

United States v.
Documents whose

contents are alleged in a complaint and whose authenticity is not
questioned by any party may also be considered in ruling on a
Rule 12(b)(6) motion to dismiss.

See Branch v. Tunnell, 14 F.3d

449, 453-54 (9th Cir. 1994).
On a Rule 12(b)(6) motion to dismiss, all allegations
of material fact are taken as true and construed in the light
most favorable to the nonmoving party.

Fed’n of African Am.

Contractors v. City of Oakland, 96 F.3d 1204, 1207 (9th Cir.
1996).

However, conclusory allegations of law, unwarranted

deductions of fact, and unreasonable inferences are insufficient
to defeat a motion to dismiss.

Sprewell, 266 F.3d at 988; Syntex

Corp. Sec. Litig., 95 F.3d 922, 926 (9th Cir. 1996).
Additionally, the court need not accept as true allegations that
contradict matters properly subject to judicial notice or
allegations contradicting the exhibits attached to the complaint.
Sprewell, 266 F.3d at 988.
Dismissal under Rule 12(b)(6) may be based on either:
(1) lack of a cognizable legal theory, or (2) insufficient facts
under a cognizable legal theory.

Balistreri v. Pacifica Police

Dept., 901 F.2d 696, 699 (9th Cir. 1988) (citing Robertson v.

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Dean Witter Reynolds, Inc., 749 F.2d 530, 533-34 (9th Cir.
1984)).
“[T]o survive a Rule 12(b)(6) motion to dismiss,
factual allegations must be enough to raise a right to relief
above the speculative level, on the assumption that all the
allegations in the complaint are true even if doubtful in fact.”
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)) (internal
quotation marks omitted); accord Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009) (“the pleading standard Rule 8 announces does not
require ‘detailed factual allegations,’ but it demands more than
an unadorned, the-defendant-unlawfully-harmed-me accusation”).
“While a complaint attacked by a Rule 12(b)(6) motion to dismiss
does not need detailed factual allegations, a plaintiff’s
obligation to provide the ‘grounds’ of his ‘entitlement to
relief’ requires more than labels and conclusions, and a
formulaic recitation of the elements of a cause of action will
not do.”

Twombly, 550 U.S. at 555.

The complaint must “state a

claim to relief that is plausible on its face.”

Id. at 570.

“A

claim has facial plausibility when the plaintiff pleads factual
content that allows the court to draw the reasonable inference
that the defendant is liable for the misconduct alleged.”
556 U.S. at 677.

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Iqbal,

IV.

MATHER MAY NOT REPRESENT THE TRUSTS
According to the litigation guaranty attached to the

Complaint, “Diane E. Maher” (which the parties agree is a
typographical error that is intended to refer to Mather)
transferred the Dole Street property to the Hana2008 Living Trust
in December 2008, and that trust transferred it to the Violet
Black Trust in October 2012.

See ECF No. 9-5, PageID # 274-75.

However, it is not entirely clear why the Hana2008 Living Trust
and the Violet Black Trust are named as Plaintiffs in this
action.

Neither trust appears to have had any relationship with

First Hawaiian Bank, as First Hawaiian Bank lent money to Mather,
not to the trusts.

The claims asserted in the Complaint appear

to belong to Mather.
Because Mather is not an attorney, and because there
has been no showing that Mather is the beneficial owner of the
trusts’ claims, Mather may not represent the trusts pro se.

See

C.E. Pope Equity Trust v. United States, 818 F.2d 696 (9th Cir.
1987).
V.

ANALYSIS.
Because it appears that both Mather and First Hawaiian

Bank are citizens of Hawaii, see Complaint ¶ 5, ECF No. 9-5,
PageID # 222 (indicating that Mather is a resident of the State
of Hawaii) and Memorandum in Support of Motion to Dismiss at 1,
ECF No. 9-3, PageID # 176 (indicating that First Hawaiian Bank is

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a Hawaii corporation), it appears that this court has original
jurisdiction over this case based only on federal question
jurisdiction.

See 28 U.S.C. § 1331.

However the Complaint’s

claims based on federal law are all barred by the applicable
limitations periods and/or are not properly pled.

Accordingly,

the court dismisses the federal question claims and declines to
exercise supplemental jurisdiction over the remaining state-law
claims.
A.

The Truth in Lending Act Claims are Dismissed.

Mather’s Eighth Cause of Action seeks damages under the
Truth in Lending Act (“TILA”).

The Eighth and Eleventh Causes of

Action also seek rescission of the loans on the Dole Street
Property based on the alleged TILA violations.

These claims are

barred.
1.

TILA Damage Claims.

Claims for damages under TILA must be brought “within
one year from the date of the occurrence of the violation.” 15
U.S.C. § 1640(e).

For violations of TILA’s disclosure

requirements, this one-year period generally begins to run from
the date of consummation of the loan.
784 F.2d 910, 915 (9th Cir. 1986).

See King v. California,

However, equitable tolling

may apply in certain circumstances:
the limitations period in Section 1640(e)
runs from the date of consummation of the
transaction but . . . the doctrine of
equitable tolling may, in the appropriate
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circumstances, suspend the limitations period
until the borrower discovers or had
reasonable opportunity to discover the fraud
or nondisclosures that form the basis of the
TILA action. Therefore, as a general rule
the limitations period starts at the
consummation of the transaction. The
district courts, however, can evaluate
specific claims of fraudulent concealment and
equitable tolling to determine if the general
rule would be unjust or frustrate the purpose
of the Act and adjust the limitations period
accordingly.
Id.
According to the allegations of the Complaint, First
Hawaiian Bank made two loans to Mather in 2008.
¶¶ 27-28.

See Complaint

The Complaint, filed in 2014, asserts that First

Hawaiian Bank violated TILA “by failing to provide Plaintiffs
with accurate material disclosures required under TILA.”
Complaint ¶ 136.

See

Given these allegations, Mather’s TILA claim

for damages is clearly barred by § 1640(e)’s one-year limitations
period, unless she can show some reason to toll the limitations
period.
Mather alleges that the one-year limitations period
should be tolled “due to Defendants’ failure to effectively
provide the required disclosures and notices.”
¶ 137.

See Complaint

Mather’s Opposition to the Motion to Dismiss does not

detail why § 1640(e)’s one-year limitations period should be
tolled.

In essence, Mather relies on the alleged nondisclosures

themselves as justifying tolling.

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Without more, this reliance is

insufficient to support tolling of the limitations period.

See

Teaupa v. U.S. Nat’l Bank, 836 F. Supp. 2d 1083, 1094 (D. Haw.
2011); accord Garcia v. Wachovia Mort. Corp., 676 F. Supp. 2d
895, 896 (C.D. Cal. 2009) (“the mere existence of TILA violations
and lack of disclosure does not itself equitably toll the statute
of limitations”).
In Teaupa, the court rejected a claim of equitable
tolling when the plaintiff had similarly alleged that the
limitations period was tolled “due to Defendants’ failure to
effectively provide the required disclosures and notices.”

The

court reasoned that this “allegation, assumed to be true for
purposes of this Motion, is insufficient to satisfy equitable
tolling because it would establish no more than the TILA
violation itself.”

Teaupa, 836 F. Supp. 2d at 1094.

As noted in Jacob v. Aurora Loan Services, 2010 WL
2673128, *3 (N.D. Cal. July 2, 2010), a “[p]laintiff cannot rely
on the same factual allegations to show that Defendants violated
federal statutes and to toll the limitations periods that apply
to those statutes.

Otherwise, equitable tolling would apply in

every case where a plaintiff alleges violations of TILA, HOEPA,
and RESPA, and the statutes of limitations would be meaningless.”
Mather’s claim for damages under TILA is time-barred,
as she did not file her Complaint until February 25, 2014, more

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than five years after the loans were consummated, and as she does
not establish that equitable tolling is warranted.
2.

TILA Rescission Claims.

Mather seeks rescission of her loan under TILA.

The

Dole Street property was sold at public auction, and the state
court confirmed the sale of the property in an order dated March
21, 2014.

Assuming Mather could be said to allege a meritorious

rescission claim, that claim is not now moot based on the present
record.

Instead, the record indicates that First Hawaiian Bank

purchased the Dole Street property, and there is no indication
that First Hawaiian Bank has subsequently sold the property.
Clearly, if First Hawaiian Bank still holds the property, it
could voluntarily unwind the loan transaction.

Accordingly, the

court turns to the merits of First Hawaiian Bank’s argument that
the three-year statute of repose bars Mather’s claim for
rescission under TILA.
When the required disclosures under TILA are not
provided, the right to rescission expires “three years after the
date of consummation of the transaction or upon the sale of the
property, whichever occurs first[.]” 15 U.S.C. § 1635(f).

This

limitations period is a statute of repose that bars any claim of
rescission under TILA filed more than three years after the
consummation of the transaction.

See Miguel v. Country Funding

Corp., 309 F.3d 1161, 1164 (9th Cir. 2002).

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This means that the

three-year limitations period is not subject to equitable
tolling.

See Beach v. Ocwen Fed. Bank, 523 U.S. 410, 412 (1998)

(holding that Ҥ 1635(f) completely extinguishes the right of
rescission at the end of the 3–year period,” even if a lender
failed to make the required disclosures).

Because Mather did not

file her Complaint until five years after her loan was
consummated (and because her property was sold after the filing
of her Complaint), her right to rescind the loan under TILA has
expired.

Accordingly, Mather’s claim for rescission under TILA

is dismissed.
B.

The Real Estate Settlement Procedures Act Claim is
Dismissed.

Mather’s Ninth Cause of Action asserts a violation of
the Real Estate Settlement Procedures Act (“RESPA”) arising out
of the 2008 loans by First Hawaiian Bank to Mather.

The

Complaint, however, does not clearly articulate the factual and
legal bases for any RESPA violation.

Instead, the Complaint

merely alleges, “Defendant violated RESPA because the payments
between the Defendant were misleading and designed to create a
windfall.”

Complaint ¶ 146, PageID # 259.

not identify which payments are at issue.

The Complaint does
The Ninth Cause of

Action is dismissed for failure to assert facts supporting a
viable claim.

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C.

The Court Declines to Exercise Supplemental
Jurisdiction Over the Remaining State-Law Claims.

Having dismissed the claims conferring federal question
jurisdiction, this court now considers whether it should exercise
supplemental jurisdiction over the remaining state law claims.
Supplemental jurisdiction, unlike federal question or diversity
jurisdiction, is not mandatory.

A court may decline to exercise

supplemental jurisdiction over a state law claim if: (1) the
claim raises a novel or complex issue of state law; (2) the state
law claim substantially predominates over the claim or claims
over which the district court has original jurisdiction; (3) the
district court has dismissed all claims over which it has
original jurisdiction; or (4) in exceptional circumstances, there
are other compelling reasons for declining jurisdiction. 28
U.S.C. § 1367.
Supplemental jurisdiction is a doctrine of discretion,
not of a plaintiff’s right.

See City of Chicago v. Int'l College

of Surgeons, 522 U.S. 156, 172 (1997); United Mine Workers of Am.
v. Gibbs, 383 U.S. 715, 726 (1966).

When, as here, “the federal

claims are dismissed before trial, even though not insubstantial
in a jurisdictional sense, the state claims should be dismissed
as well.”

Gibbs, 383 U.S. at 726.

Although the Supreme Court

has stated that such a dismissal is not “a mandatory rule to be
applied inflexibly in all cases,” it has also recognized that,
“in the usual case in which all federal-law claims are eliminated
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before trial, the balance of factors to be considered under the
pendent jurisdiction doctrine--judicial economy, convenience,
fairness, and comity--will point toward declining to exercise
jurisdiction over the remaining state-law claims.”
Carnegie–Mellon Univ. v. Cohill, 484 U.S. 343, 350 n.7 (1988).
Having dismissed the federal question claims, the court
declines to exercise supplemental jurisdiction over the remaining
state-law claims and dismisses them.
D.

Mather is Granted Leave to File an Amended
Complaint.

When this court dismisses a complaint, it normally
gives a plaintiff a chance to file an amended complaint.

Given

Mather’s history, however, the court is concerned that she may
have been abusing the court process to delay and/or hinder the
foreclosure proceedings in state court.

Now that those

proceedings have been completed, the court is concerned that
Mather may improperly try to appeal matters decided in the statecourt foreclosure proceedings to this court, which she may not do
under the

Rooker-Feldman doctrine.

See D.C. Court of Appeals v.

Feldman, 460 U.S. 462, 482-86 (1983); Rooker v. Fid. Trust Co.,
263 U.S. 413, 415-16 (1923).
The court is also concerned that, even if the RookerFeldman doctrine does not apply, Mather should have raised her
claims in the foreclosure proceedings and that issue and/or claim
preclusion may bar her from raising them now.
15

See Santos v.

State of Hawaii, 64 Haw. 648, 651-52, 646 P.2d 962, 965 (1982)
(noting that issue and claim preclusion prevent parties from
relitigating claims or issues that have already been decided by a
competent tribunal).
The court is further concerned that, even if Mather
could allege facts supporting a RESPA claim, the claim would be
time-barred.

See Swartz v. City Mort., Inc., 911 F. Supp. 2d

916, 931 (D. Haw. 2006) (“‘The statute of limitations for a RESPA
claim is either one or three years from the date of the
violation, depending on the type of violation.’” (quoting Cannon
v. U.S. Nat’l Bank, NA, 2001 WL 1637415, *5 (D. Haw. Apr. 29,
2011)).
Nevertheless, the court grants Mather leave to file an
Amended Complaint no later than July 11, 2014.

This document

must be complete in itself; it may not incorporate by reference
anything previously filed with this court.

In any Amended

Complaint, Mather may not seek to relitigate matters the merits
of which have been rule on in this order.

Mather should state in

simple language what First Hawaiian Bank allegedly did and what
statute, law, or duty was supposedly breached.

That is, Mather

should refrain from stating legal conclusions and should instead
allege facts with respect to what First Hawaiian Bank allegedly
did and why it is liable for its specific actions.

The court

suggests that Mather refrain from “cutting and pasting” from the

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original Complaint, as that document contains many legal
conclusions and general allegations, as opposed to specific
facts.

Moreover, Mather is reminded that, pursuant to Rule 8(a)

of the Federal Rules of Civil Procedure, a complaint must contain
“a short and plain statement of the claim showing that the
pleader is entitled to relief.”

A 49-page complaint that is

practically devoid of actual facts violates Rule 8.
The court also reminds Mather that, pursuant to Local
Rule 10.2(a), all documents presented for filing must meet
certain font requirements.

Thus far, Mather’s filings have

violated Local Rule 10.2(a) by using a font that is too small.
If Mather asserts fraud-based claims, she is reminded
of the heightened pleading standard of Rule 9(b) of the Federal
Rules of Civil Procedure.
Mather is further reminded that, by presenting a
proposed Amended Complaint to the court, she is certifying under
Rule 11(b) of the Federal Rules of Civil Procedure that it is not
being presented for an improper purpose and that the claims
therein are not frivolous and will be supported by facts.

If

Mather violates Rule 11 or otherwise proceeds in bad faith, she
may be subject to sanctions.
Finally, Mather is reminded that she is prohibited from
acting as the trusts’ attorney.

Accordingly, she may not

represent the trusts pro se.

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If Mather fails to timely file an Amended Complaint,
the Clerk of Court is directed to automatically close this case.
VI.

CONCLUSION.
The court dismisses Mather’s Complaint but gives her

leave to file an Amended Complaint no later than July 11, 2014.
IT IS SO ORDERED.
DATED: Honolulu, Hawaii, June 24, 2014.

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

Mather, et al. v. First Hawaiian Bank, Civil No. 14-00091 SOM/RLP; ORDER
DISMISSING COMPLAINT

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