Uy v. HSBC Bank USA, National Association

Filing 40

ORDER GRANTING DEFENDANTS' MOTION TO DISMISS COMPLAINT WITH PREJUDICE (ECF No. 29 ) AND DENYING PLAINTIFF LEAVE TO AMEND. Signed by JUDGE HELEN GILLMOR on 4/29/2015. ~ Defendants HSBC Bank USA and Ocwen Loan Serving LLCs Motionto Dismiss with Prejudice, joined by VIP Nails & Spa LLC, (ECFNo. 29) is GRANTED.Plaintiff's request for leave to file an amended complaint is DENIED. Plaintiff's Complaint is DISMISSED WITH PREJUDICE. The Clerk of Court is ordered to close this case. (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
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EUSTAQUIO N. UY,
Plaintiff,
vs.
HSBC BANK USA, NATIONAL
ASSOCIATION as Trustee Under
the Pooling and Servicing
Agreement dated as of December
1, 2005, FREEMONT HOME LOAN
TRUST 2005-E; OCWEN LOAN
SERVICING, LLC, as the Mortgage
Servicer and all persons
claiming any legal or equitable
right, title, estate, lien or
interest in the subject
property described in the
Complaint adverse to
Plaintiff’s title, or any cloud
on Plaintiff’s title thereto;
VIP NAILS & SPA, LLC, a Hawaii
Limited Liability Company, and
DOES 1-100; DOE CORPORATIONS 1100; DOE PARTNERSHIPS 1-100;
DOE ENTITIES 1-100; DOE
GOVERNMENTAL ENTITIES 1-100,
inclusive,
Defendants.
VIP NAILS & SPA, LLC,
Cross-Claimant,
vs.
HSBC BANK USA, NATIONAL
ASSOCIATION as Trustee Under
the Pooling and Servicing
Agreement dated as of December
1, 2005
Cross-Defendant.
1

ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS COMPLAINT WITH
PREJUDICE (ECF No. 29)
AND DENYING PLAINTIFF LEAVE TO AMEND
This action arises from an October 28, 2005 mortgage loan
transaction in which Plaintiff Eustaquio N. Uy borrowed $508,000
from Freemont Investment & Loan secured by a promissory note and
mortgage for purchase of property located on Kihei Road in Maui,
Hawaii. Freemont Investment & Loan later bundled and sold the
mortgage loan to Freemont Home Loan Trust 2005-E through the
securitization process.

Defendant HSBC Bank was the trustee of

the Freemont Home Loan Trust.
the mortgage loan servicer.

Defendant Ocwen Loan Servicing was

After Plaintiff’s default, HSBC Bank

foreclosed on the property and Defendant VIP Nails & Spa, LLC
bought it.
Plaintiff’s eight count Complaint complains about the
securitization process and the alleged defects in the assignment
of his note and mortgage.
For the reasons set forth below, the Court finds that
Plaintiff has failed to state a claim for which relief can be
granted.

Due to the statute of limitations expiration, defects

in Plaintiff’s claims, and because the claims have been brought
in prior lawsuits alleging nearly identical causes of action
based on nearly identical facts, the Court denies Plaintiff leave
2

to amend.
Defendants HSBC Bank USA and Ocwen Loan Serving LLC’s Motion
to Dismiss with Prejudice, joined by VIP Nails & Spa, LLC, (ECF
No. 29) is GRANTED.
Plaintiff’s request for leave to file an amended complaint
is DENIED.

PROCEDURAL HISTORY
On May 16, 2012, Plaintiff Eustaquio N. Uy, Carmelita Chun
Uy and several others brought a class action lawsuit against HSBC
Bank, Litton Loan Servicing, LP, and numerous other banks and
entities involved in the mortgage loan industry asserting claims
for conversion, conspiracy, intentional misrepresentation, fraud,
promissory estoppel, negligent misrepresentation, breach of the
implied covenant of good faith and fair dealing, and unjust
enrichment. Castillo, et al., v. Mortgage Electronic Registration
Systems, Inc., et al., Civ. No. 12-261 LEK-KSC ("Uy I").
On September 21, 2012, without service having been
effectuated on any of the named defendants, all plaintiffs,
including Plaintiff Eustaquio N. Uy, voluntarily dismissed the
case. (Uy I, ECF No. 7.)
On November 15, 2013, Plaintiff Eustaquio N. Uy and
Carmelita Chun Uy brought a class action complaint against HSBC
Bank and Litton for alleged wrongful securitization, asserting,

3

among other things, that HSBC did not "hold a perfected and
secured claim in the [P]roperty . . . ." Uy v. Fremont Investment
and Loan, et al., Civ. No. 13-625 DKW-RLP ("Uy II") (ECF No. 1, ¶
58.)
On January 20, 2014, Plaintiff Eustaquio N. Uy and Carmelita
Chun Uy voluntarily dismissed the case. (Uy II, ECF No. 8.)
On June 4, 2014, Plaintiff Eustaquio N. Uy filed the
Complaint in this action again alleging claims similar to those
brought in the two prior actions. (ECF No. 1.)

Carmelita Chun Uy

is not Plaintiff in this action.
On June 30, 2014, Defendant VIP Nails & Spa, LLC (“VIP
Nails”) filed an Answer and Cross-claim against Defendant HSBC
Bank USA, National Association as Trustee Under the Pooling and
Servicing Agreement dated as of December 1, 2005. (ECF No. 9.)
On January 21, 2015, Defendants HSBC Bank USA, National
Association, as Trustee for Freemont Home Loan Trust 2005-E,
Mortgage-Backed Certificates, Series 2005-E (“HSBC”)1 and Ocwen
Loan Servicing LLC (“Ocwen”) filed a Motion to Dismiss
Plaintiff’s Complaint with prejudice.

(ECF No. 29.)

On January 23, 2015, Defendant VIP Nails filed a Substantive
Joinder in Defendant HSBC and Ocwen’s Motion to Dismiss.

1

(ECF

HSBC submits that Plaintiff erroneously sued it as “HSBC
Bank USA, National Association as Trustee Under the Pooling and
Servicing Agreement dated as of December 1, 2005, Freemont Home
Loan Trust 2005-E”.
4

No. 30.)
On January 28, 2015, the Court granted Defendant’s
Substantive Joinder. (ECF No. 32.)
On March 12, 2015, Plaintiff filed a Memorandum in
Opposition to Defendants’ Motion to Dismiss.

(ECF No. 37.)

On March 25, 2015, Defendants’ filed a Reply.

(ECF No. 38.)

On April 9, 2015, this matter came on for hearing.
BACKGROUND
On or about October 28, 2005, Plaintiff Eustaquio N. Uy
(“Plaintiff”) entered into a mortgage loan transaction with
Freemont Investment & Loan for real property located in Kihei,
Hawaii. (Compl. ¶¶ 3, 4, Exh. 1,

ECF No. 1.)

Uy’s name is not on the mortgage.

Carmelita Chun

According to Plaintiff,

Freemont bundled and sold Plaintiff’s mortgage loan to the
Freemont Home Loan Trust 2005-E through a process known as
securtization.

(Compl. ¶ 5, ECF No. 1.) Securitization occurs

when an original lender bundles the beneficial interest in
individual loans and sells the bundles to investors as
mortgage-backed securities.

Cervantes v. Countrywide Home Loans,

Inc., 656 F.3d 1034, 1039 (9th Cir. 2011); Almaden v. Peninsula
Mortgage, Inc., CIV. 12–00390 HG–BMK, 2012 WL 6738512, at *4
(D.Haw. Dec. 31, 2012).

Securitized trusts raise funds from

investors, acquire a large number of mortgage obligations,
collect payment on the mortgages, and allocate cash flow to

5

investors. See In re Wright, 2012 WL 27500; In re New Century TRS
Holdings, Inc., 407 B.R. 576, 580 (D.Del. 2009).
Defendant HSBC Bank USA, National Association, as Trustee
for Freemont Home Loan Trust 2005-E, Mortgage-Backed
Certificates, Series 2005-E (“HSBC”) was the trustee of the
Freemont Home Loan Trust. (Compl. ¶ 6, ECF No. 1.)
fell behind on his mortgage payments.
that he was not in default.

Plaintiff

Plaintiff does not allege

On or about May 13, 2010, HSBC

foreclosed on the property by means of a non-judicial
foreclosure. (Compl. ¶ 7, ECF No. 1) Defendant VIP Nails & Spa,
LLC (“VIP Nails”) purchased the property from HSBC.

(Compl. ¶

8.)
Plaintiff complains about his original mortgagor, Freemont
Investment & Loan’s alleged conversion, sale, and transfer of his
note and mortgage on the property “into a mortgage backed
security for profit”. (Compl. ¶ 9.)

Plaintiff questions the

validity of the documents used to obtain foreclosure and alleges
that HSBC Bank was not the true owner of the loan and holder of
the note.

(Compl. ¶ 9.)

Plaintiff challenges the “chain of

ownership” for the mortgage and note and takes issue with the
securitization process. (Compl. ¶ 9 (“the note does not contain a
complete chain of endorsements establishing an unbroken chain of
title from the depositor to the issuer to the trustee of the
mortgage backed security, and that the note and mortgage sold to

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an unidentified investor who further securitized and sold the
loan to other investor . . . ); Compl. ¶¶ 23, 24.)

Plaintiff

also alleges that the foreclosure sale was void because the
mortgage and note were purportedly sold and transferred by an
entity acting for Freemont Investment & Loan after Freemont
Investment & Loan was dissolved and to a trustee (HSBA Bank)
after the Freemont Home Loan Trust had been terminated.

(Compl.

¶ 9.)
In sum, Plaintiff’s prior lawsuits, and Plaintiff’s
Complaint here, are based on the allegedly invalid assignment of
his note and mortgage.

(Compl. ¶ 20 “The validity of any and all

such purported sales and transfers of the underlying UY note and
mortgage for the Property is a fundamental issue in this
complaint”); Compl. ¶ 27.)
Plaintiff’s allegations pertain to the process by which note
and mortgage were assigned and later foreclosed upon.

The

Freemont Home Loan Trust was formed on December 1, 2005 and
terminated on January 27, 2006.

(Compl. ¶¶ 23, 24.)

was named as trustee for the trust. (Compl. ¶ 24.)

HSBC Bank

The property

was sold to the trust based on a pooling and servicing agreement.
(Compl. ¶ 23.)

Plaintiff alleges that the mortgage was assigned

to the trust after the trust had been terminated. (Compl. ¶ 25.)
Plaintiff also alleges that the property was not properly
assigned and transferred according to the terms of the Pooling

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and Service Agreement.

Plaintiff acknowledges that the mortgage

provided that the loan could be sold and transferred without
prior notice to him.

(Compl. ¶ 20, Exh. 1.)

Plaintiff summarizes the alleged deficiencies in the
securitization process and in the transfer of the note and
mortgage in paragraph 39 of his Complaint.

Plaintiff alleges

that: (1) the note was improperly separated from the mortgage;
(2) there was no complete and unbroken chain of endorsements of
the note to intervening purchasers; (3) there was no complete and
unbroken chain of assignments of the mortgage to intervening
purchasers; and (4) the mortgage was not properly endorsed,
assigned and transferred to HSBC Bank.

(Compl. ¶ 39.)

Plaintiff’s Causes of Action
Plaintiff brings the following causes of action:
(1) Unfair trade practices involving non-compliance with 15
U.S.C. § 45;
(2) Unfair and deceptive acts or practices in violation of
Haw. Rev. Stat. Chapter 480;
(3) Violation of Real Estate Settlement Procedures Act and
Truth in Lending;
(4) Wrongful Foreclosure Based on Lack of Legal Standing;
(5) Intentional Infliction of Emotional Distress;
(6) Slander of Title;
(7) Breach of Implied Covenant of Good Faith and Fair

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Dealing; and
(8) Declaratory and Injunctive Relief.
Plaintiff’s Prior Lawsuits
1.

Uy I

On May 16, 2012, Plaintiff Eustaquio N. Uy, Carmelita Chun
Uy and several others brought a class action lawsuit against HSBC
Bank, Litton Loan Servicing, LP ("Litton"), and numerous other
banks and entities involved in the mortgage loan industry
asserting claims for conversion, conspiracy, intentional
misrepresentation, fraud, promissory estoppel, negligent
misrepresentation, breach of the implied covenant of good faith
and fair dealing, and unjust enrichment. Castillo, et al., v.
Mortgage Electronic Registration Systems, Inc., et al., Civ. No.
12-261 LEK-KSC ("Uy I"). The Uy I complaint accused HSBC Bank and
the other defendants of engaging through securitization in an
"institutional, worldwide scheme to steal, rob and convert the
personal property, money and proceeds of such assets of each
Plaintiff[.]" (Uy I, ECF No. 1, ¶ 55.) On September 21, 2012,
without service having been effectuated on any of the named
defendants, all plaintiffs, including Plaintiff Uy, voluntarily
dismissed the case. (Uy I, ECF No. 7.)
2.

Uy II

On November 15, 2013, Plaintiff Uy and Carmelita Chun Uy
again brought a class action complaint against HSBC Bank and
9

Litton for alleged wrongful securitization, asserting, among
other things, that HSBC did not "hold a perfected and secured
claim in the [P]roperty . . . ." Uy v. Fremont Investment and
Loan, et al., Civ. No. 13-625 DKW-RLP ("Uy II") (ECF No. 1, ¶
58.)

Uy II involved the same mortgage loan and property.

Plaintiff Uy and his wife brought fourteen causes of action,
including, among others, claims for unfair trade practices in
violation of 15 U.S.C. § 45, unfair and deceptive acts or
practices in violation of HRS Chapter 480, violation of the Real
Estate Investment Procedures Act, wrongful foreclosure,
intentional infliction of emotional distress, slander of title,
breach of the implied covenant of good faith and fair dealing,
and declaratory relief. (Uy II, ECF No. 1.) On January 20, 2014,
Plaintiff Uy and Carmelita Chun Uy voluntarily dismissed the
case. (Uy II, ECF No. 8.)
3.

Order Awarding Defendants HSBC Bank and Ocwen Costs

On June 4, 2014, Plaintiff Eustaquio N. Uy filed the
Complaint in this case. (ECF No. 1.)

On July 17, 2014, HSBC and

Ocwen Defendants moved for an order directing Plaintiff to pay
the costs of Uy II. (ECF No. 12.) Following a hearing, the
Magistrate Judge recommended that this Court grant and deny the
motion in part and award HSBC Bank and Ocwen Defendants $881.91
in costs from Uy II. (ECF No. 27, the "F&R".) On November 18,
2014, with no objection having been filed, the Court adopted the

10

F&R. (ECF No. 28.) Plaintiff subsequently remitted payment to
HSBC and Ocwen Defendants.
In applying Fed. R. Civ. P. 41(d)2 and awarding Defendants’
costs, the Court noted that many of the claims, and much of the
verbiage, in the present case are identical to those brought in
Uy II.

STANDARD OF REVIEW
Federal Rule of Civil Procedure 12(b)(6) allows dismissal
where a complaint fails “to state a claim upon which relief can
be granted”. Salmon Spawning & Recovery Alliance v. Gutierrez,
545 F.3d 1220, 1225 (9th Cir. 2008). When considering a Rule
12(b)(6) motion to dismiss, the Court must presume all
allegations of material fact to be true and draw all reasonable
inferences in favor of the non-moving party. Pareto v. F.D.I.C.,
139 F.3d 696, 699 (9th Cir. 1998). Conclusory allegations of law
and unwarranted inferences are insufficient to defeat a motion to

2

Fed. R. Civ. P. 41(d) provides:

If a plaintiff who previously dismissed an action in
any court files an action based on or including the
same claim against the same defendant, the court:
(1) may order the plaintiff to pay all or part of the
costs of that previous action; and
(2) may stay the proceedings until the plaintiff has
complied.

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dismiss. Id. 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 v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir.
2001); Daniels–Hall v. Nat'l Educ. Ass'n, 629 F.3d 992, 998 (9th
Cir. 2010)(documents attached to the complaint and matters of
public record may be considered on a motion to dismiss).
The complaint must contain “a short and plain statement of
the claim showing that the pleader is entitled to relief.”
Fed.R.Civ.P. Rule 8(a)(2). In Bell Atlantic Corporation v.
Twombly the Supreme Court stated that Rule 8 of the Federal Rules
of Civil Procedure “requires more than labels and conclusions,
and a formulaic recitation of the elements of a cause of action,”
and that “[f]actual allegations must be enough to raise a right
to relief above the speculative level.” 550 U.S. 544, 555, 127
S.Ct. 1955, 167 L.Ed.2d 929 (2007).
In Ashcroft v. Iqbal the Supreme Court clarified that the
principles announced in Twombly are applicable in all civil
cases. 556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). The
Court stated that “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.”
Id. at 678, 129 S.Ct. 1937 (quoting Twombly, 550 U.S. at 555, 127
S.Ct. 1955). A complaint survives a motion to dismiss when it

12

contains sufficient factual matter, accepted as true, to state a
claim for relief that is plausible on its face. Id. (quoting
Twombly, 550 U.S. at 570, 127 S.Ct. 1955).
A claim is facially plausible when the factual content of
the complaint allows the court to draw the reasonable inference
that the defendant is liable for the misconduct alleged. Iqbal,
556 U.S. at 678, 129 S.Ct. 1937. The plausibility standard does
not require probability, but it requires “more than a sheer
possibility that a defendant has acted unlawfully.” Id. (quoting
Twombly, 550 U.S. at 556, 127 S.Ct. 1955). A complaint that
pleads facts that are “merely consistent with” a defendant's
liability “stops short of the line between possibility and
plausibility of ‘entitlement to relief.’” Id. (quoting Twombly,
550 U.S. at 557, 127 S.Ct. 1955).

ANALYSIS
Both the underlying theory upon which Plaintiff Eustaquio N.
Uy seeks relief and his individual claims fail as a matter of
law.

Plaintiff challenges the foreclosure of his property on

the grounds that the Defendants’ improperly securitized his loan.
(See Compl. ¶¶ 23, 35.)

As the majority of courts have held,

grievances regarding the securitzation process cannot be the
basis for a cause of action. In re Nordeen, 495 B.R. 468, 479
(9th Cir. BAP 2013) (rejecting "the idea that securitization

13

inherently changes the [] existing legal relationship between the
parties to the extent that the original parties cease to occupy
the roles they did at the closing," because "the securitization
of a loan does not in fact alter or affect the legal
beneficiary's standing to enforce the deed of trust.") (citing
Joyner v. Bank of Am. Home Loans, 2010 WL 2953969, at *1, *5, *9
(D. Nev. July 26, 2010) (footnote omitted)); Rodenhurst v. Bank
of Am., 773 F. Supp. 2d 886, 898 (D. Haw. 2011) ("The Court also
rejects Plaintiffs' contention that securitization in general
somehow gives rise to a cause of action—Plaintiffs point to no
law or provision in the mortgage preventing this practice, and
cite to no law indicating that securitization can be the basis of
a cause of action. Indeed, courts have uniformly rejected the
argument that securitization of a mortgage loan provides the
mortgagor a cause of action.")
Essentially conceding this, Plaintiff’s Opposition attempts
to distinguish his claims from those based on the securitization
process. (Opp. at p. 4, ECF No. 37.) In doing so, Plaintiff
points to his allegations that the transfer and assignment of the
note and mortgage were improper. In particular, Plaintiff argues
that the Freemont Home Loan Trust did not have an enforceable
interest because it was terminated as of January 27, 2006 and the
transfer of Freemont Investment & Loan’s interest in the note and
mortgage did not occur prior to that date. (Opp. at p. 4, ECF No.

14

37.)

The Court has rejected claims based on an allegedly invalid

assignment to a closed trust.

Such claims, as Plaintiff’s claims

here, are based on alleged violation of the terms of the pooling
and servicing agreement.

Plaintiff does not have standing to

challenge the validity of the assignment on these grounds.

Abubo

v. Bank of New York Mellon, Civ. No. 11–00312 JMS–BMK, 2011 WL
6011787, at *8 (D. Haw. Nov. 30, 2011) (observing that the
argument that assignments to a closed trust are invalid "has been
rejected in recent decisions by many courts—which this court
finds persuasive—either (1) because a third party lacks standing
to raise a violation of a [pooling and servicing agreement], or
(2) because noncompliance with terms of a [pooling and servicing
agreement] is irrelevant to the validity of the assignment (or
both).").
Indeed, it is well established that a plaintiff borrower
does not have standing to challenge the validity of assignments
to securitization trusts.

See, e.g., Brodie v. Nw. Trustee

Servs., Inc., 579 F. App'x 592, 593 (9th Cir. 2014) ("The
district court also correctly concluded that
[plaintiff/mortgagor] lacks standing to challenge the transfer
and assignment of the note and deed of trust. She is neither a
party to nor a beneficiary of the assignment and transfer.");
Rajamin v. Deutsche Bank Nat'l Trust Co., 757 F.3d 79 (2d Cir.
2014) (district court "properly ruled that plaintiffs lacked

15

standing to enforce the agreements to which they were not parties
and of which they were not intended beneficiaries.")

This is

because “borrowers do not have standing to challenge the validity
of an assignment of its loans because they are not parties to the
agreement[.]" U.S. Bank, N.A. v. Salvacion, 338 P.3d 1185, 1190
(Haw. App. 2014) (recognizing that "[r]ecent decisions by State
and Federal courts in Hawai`i have 'rejected identical arguments
… contesting the validity of assignments to securitization
trusts.").
Recently, in Hunt v. U.S. Bank, N.A., 2015 WL 738067 (9th
Cir. Feb. 23, 2015) (unpublished), the Ninth Circuit Court of
Appeals rejected an argument similar to that made by Plaintiff
here.

In Hunt, the borrowers challenged the bank’s authority to

foreclose based on alleged defects in the securitization process
and the validity of the assignments.

In upholding the district

court’s dismissal of Plaintiff’s claims, the Court noted that the
plaintiffs, similar to the Plaintiff here, had executed a note
and deed of trust allowing for the lender to transfer the note
without notice and did not dispute that they defaulted on their
loan.

Hunt, 539 Fed.Appx. at 732.

The Court reasoned: “Even if

the improper securitization occurred or the assignments were
fraudulent, the Hunts are not a party to those transactions and
are not the victims.” Id.
Along these lines, a foreclosing mortgagee is not obligated

16

to show that it possesses or owns the original note or mortgage
or an endorsed promissory note. See, e.g., Bank of New York
Mellon Trust Co., N.A. v. Timosan, 2014 WL 37886, at *4
(Haw. App. 2014) (holding that "Hawai`i's former non-judicial
foreclosure act does not require a mortgagee to affirmatively
prove that it holds the note."); see also Fed. Home Loan Mortg.
Corp. v. Kama, 2014 WL 4980967, at *7 (D. Haw. Oct. 3, 2014)
("This district court has consistently rejected claims that a
mortgagee is required to prove that it possesses or owns the
original Note or Mortgage in order to lawfully foreclose under
H.R.S. § 667-5" (collecting cases)).

Plaintiff cannot assert a

claim challenging the validity of HSBC Bank’s foreclosure on this
ground.

Nor was a foreclosing mortgagee, under the Hawaii

Non–Judicial Foreclosure Statute, Haw. Rev. Stat. § 667–5, in
effect at the time of the foreclosures, obligated to record
intermediary or interim assignments that occurred via
securitization.

Lizza v. Deutsche Bank Nat'l Trust Co., 1 F.

Supp. 3d 1106, 1119 (D. Haw. 2014) ("Neither Defendant's failure
to record intermediary assignments, nor its omission of any
interim assignments in the recorded assignment, violates any
Hawaii statute or otherwise provides Plaintiffs with a cause of
action.").
For these reasons, the legal theory which underlies all of
the claims in Plaintiff’s Complaint is flawed.

17

Plaintiff has also failed to state claims in Counts 1
through 8 as a matter of law.
Count 1: Unfair trade practices involving non-compliance
with 15 U.S.C. § 45 (Federal Trade Commission Act)
Count I alleges unfair trade practices in violation of the
Federal Trade Commission Act, 15 U.S.C. § 45.
ECF No. 1.)

(Compl. ¶¶ 41-46,

Count 1 fails as a matter of law because there is no

private right of action under the Federal Trade Commission Act.
Arenas v. Countrywide Home Loans, Inc., 2009 WL 48231 at *3 (S.D.
Cal. Jan 7, 2009) (citing Carlson v. Coca-Cola Co., 483 F.2d 279,
280 (9th Cir. 1973); U.S. ex. rel. Lapin v. International
Business Machines Corp., 490 F. Supp. 244, 248 (D. Haw. 1980)
("Nor does the Federal Trade Commission Act make provision for a
private right of action, either explicit or implicit; 'the Act
vests initial remedial power solely in the Federal Trade
Commission.'") (citations omitted).

Count 2: Unfair and deceptive acts or practices in
violation of Haw. Rev. Stat. Chapter 480

In Count 2, Plaintiff makes general allegations that HSBC
Bank and Ocwen violated the Unfair and Deceptive Trade Practices
Act, HRS § 480-2 and -13 ("UDAP"). (Compl. ¶¶ 47–50, ECF No. 2.)
Plaintiff’s UDAP claim fails because it is inadequately pled and
untimely.

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A consumer bringing a UDAP claim must allege: (1) a
violation of HRS Chapter 480; (2) injury to plaintiff’s business
or property resulting from such violation; and (3) proof of the
amount of damages. Hawaii Med. Ass’n v. Hawaii Med. Serv. Ass'n,
Inc., 113 Hawai’i 77, 148 P.3d 1179, 1215–16 (2006). An injury
must be "fairly traceable to the defendant's actions." Flores v.
Rawlings Co., LLC, 117 Hawai’i 153, 177 P.3d 341, 359 n. 23
(2008) (internal citation omitted).

Plaintiff does not allege

any of the elements of a UDAP claim.

Plaintiff’s UDAP claim

fails for lack of specificity.
Plaintiff’s UDAP claim is also untimely, UDAP claims are
subject to a four-year statute of limitations. HRS § 480–24(a).
The statute of limitations period starts to run upon the
occurrence of the alleged violation. Dodds v. BAC Home Loans
Servicing, LP, 2011 WL 1483971, at * 7 (D. Haw. Apr. 19, 2011).
Because Plaintiff’s claim is inadequately pled, it is somewhat
difficult to decipher the date of the occurance of the alleged
violation.

Plaintiff entered into the mortgage loan transaction

on October 28, 2005.

The statute of limitations for any UDAP

claims based on the origination of the mortgage loan expired on
October 28, 2009. The non-judicial foreclosure was completed on
May 13, 2010 when the property was foreclosed. Any UDAP claim
based on the securitization of the loan or nonjudicial
foreclosure of the property expired at the latest on May 13,

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2014.

Plaintiff did not file this Complaint until June 4, 2014.
Equitable tolling may be appropriate where there has been

fraudulent concealment. See Rundgren v. Bank of N.Y. Mellon, 777
F.Supp.2d 1224, 1231 (D. Haw. 2011) (construing "HRS Ch. 480
in accordance with federal cases interpreting similar federal
antitrust laws such as 15 U.S.C. § 15h ,…[such that] the statute
of limitations on a HRS Ch. 480 claim may be tolled under the
equitable tolling doctrine of fraudulent concealment").
Plaintiff does not pled any facts which would establish
fraudulent concealment of any of Defendants’ alleged conduct in
violation of UDAP.

Plaintiff suggests that Defendants’ concealed

the fact that they lacked proper standing to foreclose since the
transfer of the note and mortgage was made to a terminated trust.
(Compl. ¶¶ 25-33, Opp. at p. 5.)

Plaintiff has no cause of

action on this ground, and it is not a basis for equitable
tolling.

Count 3: Violation of Real Estate Settlement Procedures Act
Plaintiff’s claim under the Real Estate Settlement and
Procedures Act, 12 U.S.C. § 2605, et seq. ("RESPA") is inadequate
and untimely.3

Plaintiff alleges HSBC Bank and Ocwen violated

3

The title of Plaintiff’s third cause of action also refers
to “Truth and Lending.” (Compl. at p. 18, ECF No. 1.) The Truth
in Lending Act, 15 U.S.C. § 1631, et seq. is not referenced
anywhere else in Plaintiff’s Complaint and there are no
allegations pertaining to the violation of it.
20

RESPA by failing to disclose sales and transfers of the note and
mortgage in writing and in a timely and reasonable
manner. (Compl. ¶ 52, ECF No. 1.)

Plaintiff fails to cite any

specific provision of RESPA that Defendants HSBC Bank and Ocwen
allegedly violated.

Failure to do so is grounds for dismissal.

See Valencia v. American Home Mortg. Servicing, Inc., 2011 WL
2910109 at *5 (D. Haw. July 15, 2011) ("Plaintiff fails to cite
any specific provision of RESPA that was violated by Defendants,
which is grounds for dismissal of the claim, alone." (citations
omitted)).
Plaintiff’s RESPA claim is also untimely.

RESPA claims for

violation of Section 2605 are subject to a three-year statute of
limitations. The non-judicial foreclosure occurred on May 13,
2010.

There are no allegations that the Defendants failed to

disclose sales and transfers of the note and mortgage after that
date.

Plaintiff did not file his complaint until more than three

years after the foreclosure.

Plaintiff’s RESPA claim is time

barred.

Count 4: Wrongful Foreclosure Based on Lack of Legal
Standing
In support of Plaintiff’s fourth claim, he alleges that HSBC
Bank lacked the requisite authority to enforce the note and
mortgage as neither instrument was assigned in accordance with
the pooling and servicing agreement.
21

(Compl. ¶¶ 59-66, ECF No.

1.) Plaintiff does not have standing to raise non-compliance with
the terms of the pooling and servicing agreement and such facts
cannot be the basis for a wrongful foreclosure claim. See supra
at pp. 13-15.
Plaintiff has also otherwise failed to state a wrongful
foreclosure claim.

A plaintiff may bring a wrongful foreclosure

claim where: (1) "the foreclosure process failed to comply with
Haw. Rev. Stat. Chapter 667[;]" and (2) the foreclosing entity
did not have the right to foreclose. Lowther v. U.S. Bank N.A.,
Civ. No. 13–00235 LEK-BMK, 2013 WL 4777129, at *20, 21 (D. Haw.
Sept. 4, 2013) (quoting Niutupuivaha v. Wells Fargo Bank, N.A.,
Civ. No. 13–00172 LEK–KSC, 2013 WL 3819600, at *9 (D. Haw. July
22, 2013)).

Plaintiff does not allege any violations of Hawaii

Revised Statutes, Chapter 667.
Plaintiff has not put forth allegations to support a claim
that the foreclosing entity, HSBC Bank, did not have the right to
foreclose.

Plaintiff alleges that the Defendants failed to

properly record the assignment of mortgage.

The failure to

record an assignment of a mortgage does not invalidate an
assignment.

Swartz v. City Mortgage, Inc., 911 F. Supp. 2d 916,

939–40 (D. Haw. 2012).

The failure to record an assignment of

mortgage also does not create a private right of action against a
foreclosing party who is the rightful note holder. Id.

Alleged

defects in the securitization process or the chain of custody of

22

the mortgage or note does not give rise to a wrongful foreclosure
claim.

See Lizza, 1 F.Supp.3d at 1120.

Plaintiff has failed to allege a wrongful foreclosure claim.
Count 5: Intentional Infliction of Emotional Distress
Plaintiff alleges that the allegedly wrongful foreclosure
and attempts to remove Plaintiff and his tenants from the
property has caused him emotional distress. (Compl. ¶¶ 69, 70-71,
ECF No. 1.)
foreclosure.

Plaintiff’s allegations arise from the 2010
Plaintiff’s intentional infliction of emotion

distress claim is subject to a two-year statute of limitations.
Haw. Rev. Stat. § 657-7.

Plaintiff does not allege the

occurrence of any events that allegedly caused him emotional
distress within the statue of limitations period.
Plaintiff has also failed to pled the required facts for an
intentional infliction of emotional distress (“IIED”) claim.

To

state an IIED claim, the plaintiff must allege facts showing
conduct that was either intentional or reckless and outrageous
and that plaintiff suffered extreme emotional distress as a
result of defendant’s conduct.

Young v. Allstate Ins. Co., 119

Hawai`i 403, 198 P.3d 666, 688 (2008).

Defendants’ allegedly

unlawful conduct does not give rise to an IIED claim.

Uy v.

Wells Fargo Bank, N.A., 2011 WL 1235590, at *14 (D. Haw. Mar. 28,
2011) ("Default and foreclosure proceedings generally do not rise
to the level of extreme and outrageous conduct. Denying a loan

23

modification which might result in foreclosure is no more
‘outrageous in character’ than actually foreclosing.") (citations
omitted).
Plaintiff’s IIED claim is time barred and inadequately pled.
Count 6: Slander of Title
Plaintiff alleges that HSBC Bank and Ocwen Defendants
"disparaged and slandered UY's exclusive valid title to the
Property by means of the preparation, posting and publishing of
documents which are wrong and misleading, which documents include
but are not limited to recorded documents pertaining to the
mortgage, assignment of mortgage, foreclosure documents, and
deeds purportedly transferring title to the subject Property."
(Compl. ¶ 75.)
To establish slander of title at common law, a plaintiff
must show falsity, malice, and special damages, i.e., that the
defendant maliciously published false statements that disparaged
a plaintiff’s right in property, causing special damages. Velasco
v. Sec. Nat’l Mortg. Co., 2011 WL 4899935, at *5 (D. Haw. Oct.
14, 2011) (quotations and citations omitted).
As set forth above, Plaintiff has failed to state a viable
claim against Defendants based on the securitization process,
defects in the chain of custody for the note and mortgage, or for
wrongful foreclosure.

Plaintiff’s slander of title claim is

based upon these same alleged facts and fails for the same

24

reasons.

Plaintiff does not otherwise allege that Defendants

HSBC Bank, Ocwen, or VIP Nails published false statements or that
they did so with malice.
Plaintiff has failed to state a Hawaii common law slander of
title claim.
Count 7: Breach of Implied Covenant of Good Faith and Fair
Dealing
Plaintiff’s cause of action for breach of the implied
covenant of good faith and fair dealing is based primarily on
Defendants HSBC Bank and Ocwen’s alleged failure to disclose any
transfers of the note and mortgage and the allegedly improper
transfer and assignment of the note and mortgage. (Compl. ¶¶ 84,
86, 87, 88, 89, 91, 92, 95, 96.)

Plaintiff’s cause of action

based on these allegations fails as a matter of law because
Hawaii law has not recognized a bad faith claim based on a
mortgage loan contract.

Cablay v. Bank of America, N.A., 2013 WL

1789770, *4 (D. Haw. April 26, 2013) (“the tort of bad faith has
not been recognized in Hawaii based upon a mortgage loan
contract”).
Plaintiff also makes allegations pertaining to “the consent
judgment entered into by OCWEN to properly service loans and to
provide opportunities for loss mitigation and the agreement to
stipulate to remand to consider loss mitigation.” (Compl. ¶ 85.)
Plaintiff’s allegations in paragraph 85 of his Complaint

25

regarding the consent judgment entered into by Ocwen are vague.
Plaintiff makes other allegations referencing the consent
judgment that are similarly vague and do not state a cause of
action.

(Compl. ¶ 90 (“This includes not selling the Property to

a Third-Party in contravention of the OCWEN consent judgment and
its duties to allow loss mitigation including principal
reductions.”)); Compl. ¶ 97 (“This includes not attempting to
sell or transfer title to the subject property to a party when it
is known title and the right to foreclose is disputed and that
there was a stipulation to remand a related case in order to
consider loss mitigation.”)

Plaintiff does not state that he was

a party to the consent judgment, adequately describe any of its
terms, or in any way make clear how the consent judgment could be
considered a contract, much less one for which Plaintiff could
have a cause of action for breach of an implied covenant of good
faith and fair dealing.

Cablay, 2013 WL 1789770, at *4 (even

assuming a bad faith tort exists outside the insurance context,
it is well-settled that “[a] party cannot breach the covenant of
good faith and fair dealing before a contract is formed.”).
For these reasons, Plaintiff has not stated a claim for
breach of an implied covenant of good faith and fair dealing
based on the facts alleged.
Count 8: Declaratory and Injunctive Relief
Plaintiff’s eighth cause of action is for declaratory and

26

injunction relief.

A claim for declaratory and injunctive relief

is not a separate cause of action.

White v. IndyMac Bank, FSB,

2011 WL 1483928, at *8 (D. Haw. Apr. 18, 2011) (holding that
injunctive relief claim was improper as it is well-settled that a
claim for "injunctive relief" standing alone is not a cause of
action).

Moreover, Plaintiff’s cause of action for declaratory

and injunctive relief is based on the same factual allegations
that the Court has found fail to state a valid cause of action.
Plaintiff’s cause of action for declaratory and injunctive
relief is dismissed.
Denial of Leave to File Amended Complaint
Plaintiff requests leave to file an amended complaint. (ECF
No. 37, Opp. at p. 10.)
Because Counts 2, 4, and 5 are time-barred the Court does
not grant Plaintiff leave to amend as to his causes of action for
violation of UDAP (Count 2), wrongful foreclosure based on lack
of standing (Count 4), and intentional infliction of emotional
distress (Count 5).
Plaintiff is not granted leave to amend as to Counts 1, 7,
and 8 because no amendment could cure their deficiencies. Counts
1, 7, and 8 for violation of the Federal Trade Commission Act
(Count 1), breach of implied covenant of good faith and fair
dealing (Count 7), and for declaratory and injunctive relief
(Count 8) are not actionable as a matter of law.

27

The Court also denies leave to amend as to Counts 4
(wrongful foreclosure based on lack of standing) and 6 (slander
of title).

Plaintiff has failed to allege facts which would

support these causes of action.
Moreover, denial of leave to amend is appropriate where
there is (1) bad faith, (2) undue delay, (3) prejudice to the
opposing party, and (4) futility. Owens v. Kaiser Foundation
Health Plan, Inc., 244 F.3d 708, 712 (9th Cir. 2001).
“[P]rejudice to the opposing party . . .
weight."

carries the greatest

Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048,

1052 (9th Cir. 2003).

This is Plaintiff’s third lawsuit

containing allegations based on a securitization theory and based
on the alleged invalidity of the assignments of a note and
mortgage.

The Court awarded Defendants’ costs as to Plaintiff’s

second lawsuit, Uy II.

Plaintiff has had ample opportunity to

attempt to state a claim for relief regarding his mortgage loan
transaction.

Granting Plaintiff leave to amend would be futile

and would prejudice the Defendants.
CONCLUSION
Defendants HSBC Bank USA and Ocwen Loan Serving LLC’s Motion
to Dismiss with Prejudice, joined by VIP Nails & Spa LLC, (ECF
No. 29) is GRANTED.
Plaintiff’s request for leave to file an amended complaint
is DENIED.
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Plaintiff’s Complaint is DISMISSED WITH PREJUDICE.
The Clerk of Court is ordered to close this case.

IT IS SO ORDERED.
Dated: April 29, 2015, Honolulu, Hawaii.

/s/ Helen Gillmor
Helen Gillmor
United States District Judge

______________________________________________________________________________
Uy v. HSBC Bank USA, et al. Civ. No. 14-00261; ORDER GRANTING
DEFENDANTS’ MOTION TO DISMISS COMPLAINT WITH PREJUDICE (ECF No. 29)
AND DENYING PLAINTIFF LEAVE TO AMEND

29