Federal Home Loan Mortgage Corporation v. Griep et al

Filing 30

ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT ON COUNT 1 OF PLAINTIFF'S COMPLAINT re 23 MOTION for Summary Judgment filed by Federal Home Loan Mortgage Corporation. Signed by JUDGE LESLIE E. KOBAYASHI on 11/17/2015. Plaintiff Federal Home Loan Mortgage Corporation's Motion for Summary Judgment on Count 1 of Plaintiff's Complaint, filed August 20, 2015, is HEREBY GRANTED IN PART AND DENIED I N PART. The Motion is GRANTED insofar as the Court ORDERS that the Notice, recorded with the BOC as Document Number 2011-080312, be INVALIDATED AND EXPUNGED. The Motion is DENIED as to: (1) Plaintiff's request that the Court order payment of � 36;5,000 and enjoin Defendants from filing with the registrar for five years; (2) Plaintiff's request for attorneys' fees and costs; and (3) Plaintiff's request for entry of final judgment. The denial of the request for attorneys' fees and costs is without prejudice to the filing of the appropriate motion after the entry of judgment on all claims. (eps)CERTIFICATE OF SERVICEParticipants registered to receive electronic notifi cations 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
FEDERAL HOME LOAN MORTGAGE
CORPORATION, a corporation
organized under an Act of
Congress on July 24, 1970,
through the Enactment of
Title III of the Emergency
Home Finance Act of 1970,

)
)
)
)
)
)
)
)
Plaintiff,
)
)
)
vs.
)
SKYE KAPENAOKALANI GRIEP, an )
)
individual, TAILENE
)
NICHOLETTE GRIEP, an
)
individual, and DOES 1
)
through 25, inclusive,
)
)
Defendants.
_____________________________ )

CIVIL 15-00003 LEK-KSC

ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFF’S MOTION
FOR SUMMARY JUDGMENT ON COUNT 1 OF PLAINTIFF’S COMPLAINT
On August 20, 2015, Plaintiff Federal Home Loan
Mortgage Corporation, a corporation organized under an Act of
Congress on July 24, 1970, through the Enactment of Title III of
the Emergency Home Finance Act of 1970 (“Plaintiff” or “Freddie
Mac”), filed its Motion for Summary Judgment on Count 1 of
Plaintiff’s Complaint (“Motion”).

[Dkt. no. 23.]

On October 19,

2015, Plaintiff submitted a reply to notify the Court that pro se
Defendants Skye Kapenaokalani Griep and Tailene Nicholette Griep
(“Defendants”) did not file any opposition, and to urge the Court
to grant the Motion.

[Dkt. no. 26.]

In an Entering Order filed on October 26, 2015, the
Court granted the Motion and vacated the hearing on the Motion,
originally scheduled for November 2, 2015 at 10:30 a.m.
(“10/26/15 EO Ruling”).

[Dkt. no. 27.]

supersedes the 10/26/15 EO Ruling.

The instant Order

After careful consideration

of the Motion and the relevant legal authority, Plaintiff’s
Motion is HEREBY GRANTED IN PART AND DENIED IN PART for the
reasons set forth below.
BACKGROUND
In December 2007, IndyMac Bank, Federal Savings Bank
(“F.S.B.”) (“IndyMac”), gave Defendants a loan for $344,000,
which was secured by a mortgage on the property at 117 Papalina
Road, Kalaheo, Hawai`i 96741 (“the Property”).

[Complaint for:

(1) Cancellation of Written Instrument; (2) Slander of Title; and
(3) Quiet Title (“Complaint”), filed 1/6/15 (dkt. no. 1), at
¶¶ 5-6.]

On December 31, 2007, IndyMac recorded the mortgage

with the State of Hawai`i, Bureau of Conveyances (“BOC”) as
Document Number 2007-223927.

[Id. at ¶ 6.]

On July 30, 2010,

the mortgage was assigned to OneWest Bank F.S.B. (“OneWest”), and
the assignment was properly recorded as Document Number 2010108738.

[Id. at ¶ 8.]

Subsequently, Defendants defaulted on

their mortgage; on March 9, 2011, Plaintiff purchased the
Property at a foreclosure sale (“3/9/11 Sale”); and on April 5,
2011, Plaintiff recorded the Quitclaim Deed as Document Number

2

2011-055650 (“Deed”).

[Id. at ¶ 9.]

The Deed “conveyed all

title and interest in the Subject Property to Plaintiff.”

[Id.]

“[O]n May 18, 2011, Defendants recorded a Notice of Defect of
Title” (“Notice”) “in the BOC as Document Number 2011-080312.”
[Id. at ¶ 10.]
Plaintiff alleges the Notice “wrongfully and
fraudulently states that Defendants have title to the Property
‘with right to remedy’ and that there is a defect in the
Property’s title.”

[Id.]

Further, Plaintiff argues that the

Notice “wrongfully and fraudulently clouds Plaintiff’s title, and
therefore is a ‘lien’ under [Haw. Rev. Stat.] § 507D-2” and that
“Defendants lacked any basis in fact or law to record the
Notice.”

[Id. at ¶¶ 15-16.]

Plaintiff also asserts that the

Notice “is frivolous under [Haw. Rev. Stat.] § 507D-2” and is a
“nonconsensual common law lien within the meaning of [Haw. Rev.
Stat.] Chapter 507D.”

[Id. at ¶¶ 17-18.]

If the Notice “is not

cancelled[,]” “Plaintiff will be unable to exercise its rights as
owner of the Property.”

[Id. at ¶ 20.]

The Motion asks this Court to:

(1) grant summary

judgment for Plaintiff on Count 1,1 thus cancelling the Notice;
(2) declare that the Notice is frivolous; (3) strike the Notice
from the BOC’s records nunc pro tunc; (4) order Defendants to pay

1

Count 1 seeks the “[c]ancellation of written instruments
against all Defendants under [Haw. Rev. Stat.] Chapter 507D.”
[Complaint at pg. 6.]
3

the statutory-based $5,000, plus attorneys’ fees and costs; and
(5) enjoin Defendants from filing liens in the BOC.
Supp. of Motion at 8.]
Fed. R. Civil P. 54(b).

[Mem. in

Plaintiff also seeks final judgment under
[Motion at 3.]
DISCUSSION

Plaintiff brings the instant suit pursuant to, inter
alia, Haw. Rev. Stat. § 507D-4(a),2 which states, in relevant
part:
Any party in interest in real or personal property
which is subject to a claim of nonconsensual
common law lien, who believes the claim of lien is
invalid, may file a petition in the appropriate
circuit court to contest the validity of that
purported lien and to enjoin the lien claimant
from making further filings with the registrar.
The petition shall state the grounds upon which
relief is requested, and shall be supported by the
affidavit of the petitioner or the petitioner’s
attorney setting forth a concise statement of the
facts upon which the petition is based. . . .
While, on its face, the statute requires an affected party to
file a petition in state circuit court, Plaintiff correctly
points out that this language does not divest this Court of
jurisdiction.

See, e.g., Olson v. Lui, Civ. No. 10-00691 ACK-

RLP, 2012 WL 39293, at *2 n.1 (D. Hawai`i Jan. 6, 2012)

2

In passing § 507D, the legislature sought to remedy “a
problem with the recording at the land court or the bureau of
conveyances of invalid instruments which purport to affect the
property interests of various persons . . . . These instruments,
which have no basis in fact or law, have a seriously disruptive
effect on property interests and title.” Haw. Rev. Stat. § 507D1.
4

(“Nothing in Chapter 507D confers exclusive jurisdiction on the
state circuit court.”).
A nonconsensual common law lien:

“(1) Is not provided

for by a specific statute; (2) Does not depend upon, require by
its terms, or call for the consent of the owner of the property
affected for its existence; and (3) Is not a court-imposed
equitable or constructive lien.”

§ 507D-2.

Further, “[a]ny

claim of nonconsensual common law lien against a private party in
interest shall be invalid unless accompanied by a certified order
from a state or federal court of competent jurisdiction
authorizing the filing of nonconsensual common law lien.”

Haw.

Rev. Stat. § 507D-5(b).
Finally, if a court finds that the lien is invalid,
it shall order the registrar to expunge the
instrument purporting to create it, and order the
lien claimant to pay actual damages, costs of
suit, and reasonable attorneys’ fees. This order
shall be presented to the registrar for
recordation and shall have the effect of voiding
the lien from its inception. If the circuit court
finds the purported lien is frivolous, the
prevailing party in any action brought under
section 507D-4 shall be awarded costs of suit,
reasonable attorneys’ fees, and either actual
damages or $5,000, whichever is greater. The
foregoing award shall be made in the form of a
joint and several judgment issued in favor of the
prevailing party and against each lien claimant
and also against each person who owns or controls
the activities of the lien claimant if the lien
claimant is not a natural person.
Haw. Rev. Stat. § 507D-7(a).

The Court may also preclude the

party that filed the improper lien from filing any lien without
5

“leave of court” for five years.

§ 507D-7(b) (emphasis added).

Under Fed. R. Civ. P. 56, “[s]ummary judgment must be
granted against a party that fails to demonstrate facts to
establish what will be an essential element at trial.”

Rodriguez

v. Gen. Dynamics Armament & Tech. Prods., Inc., 696 F. Supp. 2d
1163, 1176 (D. Hawai`i 2010) (citing Celotex v. Catrett, 477 U.S.
317, 323, 106 S. Ct. 2548 (1986)).

“A moving party has both the

initial burden of production and the ultimate burden of
persuasion on a motion for summary judgment.”

Id. (citing Nissan

Fire & Marine Ins. Co. v. Fritz Cos., 210 F.3d 1099, 1102 (9th
Cir. 2000)).

Once the moving party meets its initial burden,

“the ‘burden then shifts to the nonmoving party to establish,
beyond the pleadings, that there is a genuine issue for trial.’”
Id. (quoting Miller v. Glenn Miller Prods., Inc., 454 F.3d 975,
987 (9th Cir. 2006)).

When “a party fails to properly support an

assertion of fact or fails to properly address another party’s
assertion of fact . . . the court may” “consider the fact
undisputed for purposes of the motion.”

Fed. R. Civ. P.

56(e)(2).
Defendants did not file an opposition or any response
to Plaintiff’s Motion.

A pro se party is held to a less

stringent standard than a party that is represented by an
attorney, see Haines v. Kerner, 404 U.S. 519, 520 (1972) (per
curiam) (pro se complaints are held “to less stringent standards

6

than formal pleadings drafted by lawyers”); Jackson v. Carey, 353
F.3d 750, 757 (9th Cir. 2003), but pro se litigants are not
excused from following rules of procedure.

King v. Atiyeh, 814

F.2d 565, 567 (9th Cir. 1987) (citation omitted), overruled on
other grounds by Lacey v. Maricopa Cty., 693 F.3d 896 (9th Cir.
2012).

The Court may not grant a motion for summary judgment

“simply because the [pro se] nonmoving party does not file
opposing material.”

Winchester-Sye v. Cty. of Hawaii, Civ. No.

12-00592 ACK-KSC, 2014 WL 5465308, at *3 n.3 (D. Hawai`i Oct. 27,
2014) (some citations omitted) (citing Marshall v. Gates, 44 F.3d
722, 723-25 (9th Cir. 1995)).

The Court “may, however, grant

summary judgment when the unopposed moving papers are sufficient
on their face and show that no issues of material fact exist.”
Id. (some citations omitted) (citing Henry v. Gill Indust. Inc.,
983 F.2d 943, 950 (9th Cir. 1993)).
I.

The Notice
It is clear to the Court that Plaintiff has met its

initial burden, and has shown that there is no issue of material
fact.

Plaintiff states that it “purchased the Property at the

foreclosure auction and there is a Quitclaim Deed in its favor,”
and asserts that Defendants cannot show that they have “any other
rights in the Property sufficient to justify clouding Freddie
Mac’s title.”

[Mem. in Supp. of Motion at 5.]

supports its Motion with:

Plaintiff

Defendants’ mortgage; [Pltf.’s Concise

7

Statement, filed 8/20/15 (dkt. no. 24), Decl. of Kee M. Campbell
(“Campbell Decl.”), Exh. 1;] the assignment of the mortgage to
OneWest; [id., Exh. 2;] Plaintiff’s Deed, received after purchase
of the Property at the 3/9/11 Sale; [id., Exh. 3;] the Notice;
[id., Exh. 4;] and a Status Report from Title Guaranty of Hawaii,
Inc. (“Status Report”), which shows that the Notice clouds
Plaintiff’s title to the Property [id., Exh. 5].3

The court

FINDS that Defendants filed a nonconsensual common law lien
without the necessary court order, in violation of Haw. Rev.
Stat. § 507D-5(b).4

See, e.g., Connors v. Cassidy, No. 28070,

3

The Status Report shows that Plaintiff has title to the
Property subject to some exceptions, including the Notice at
issue in the instant Motion. [Campbell Decl., Exh. 5 at 1-2.]
Thus, the Notice is a lien because it “creates an encumbrance on
or affects title or ownership of property.” See § 507D-2.
4

The text of § 570D-5(b) states what is required for “[a]ny
claim of nonconsensual common law lien against a private party in
interest.” While no court has looked at whether Freddie Mac is a
private party for purposes of § 507D-5(b), many courts, including
this district court, have considered this issue in other
contexts:
In Lebron v. National Railroad Passenger
Corp., 513 U.S. 374, 400 (1995), the Supreme Court
held that government-created corporations like
Freddie Mac are federal governmental actors if
they are created by special law for the
furtherance of governmental objectives and if the
government has permanent authority to appoint a
majority of the directors of the corporation.
Applying this holding of Lebron, the Ninth Circuit
has concluded “that Freddie Mac is not a
government agency subject to the Fifth Amendment’s
Due Process clause.” Am. Bankers Mortg. Corp. v.
Fed. Home Loan Mortg. Corp., 75 F.3d 1401, 1409
(continued...)
8

2009 WL 924511 (Haw. Ct. App. Apr. 7. 2009) (“The Circuit court
correctly expunged the illegal lien recorded in the Bureau of
Conveyances by Cassidy.

Cassidy’s lien was a nonconsensual

common law lien. . . . [and he failed] to attach a court order
authorizing the filing of the lien.” (citations omitted)).

The

Court GRANTS the Motion insofar as the Court ORDERS that the
Notice, recorded with the BOC as Document Number 2011-080312, be
INVALIDATED AND EXPUNGED.
II.

Other Requests for Relief
Plaintiff also seeks a determination that the lien is

“frivolous,” and the mandatory award of “costs of suit,
reasonable attorneys’ fees, and either actual damages or $5,000,
whichever is greater,” § 507D-7(a), as well as an injunction
preventing Defendants from “further filings of any kind with the
registrar” for five years.

§ 507D-7(b).

Section 507D-2 defines

4

(...continued)
(9th Cir. 1996).
This Court notes that Am. Bankers was issued
before [the Federal Housing Finance Agency
(“FHFA”)], a federal agency, became Freddie Mac’s
conservator in 2008. However, numerous district
courts have held that Freddie Mac, and similar
entity Federal Nation Mortgage Association
(“Fannie Mae”), which was also placed into FHFA’s
conservatorship, did not become federal
governmental actors post-conservatorship.

Fed. Home Loan Mortg. Corp. v. Kama, Civil No. 14-00137 ACK-KSC,
2014 WL 4980967, at *16 (D. Hawai`i Oct. 3, 2014) (some citations
omitted).
9

frivolous as “without any basis in law or fact.”

Plaintiff

asserts that the Notice “wrongly states that [Defendants] have
title to the Property ‘with right to remedy’ an alleged defect in
the Property’s title.”

[Mem. in Supp. of Motion at 5.]

The Notice itself states that Defendants retained
Laulima Title Search & Claims, LLC (“Laulima Title”) to
investigate the Property’s title, and “the investigation
concluded the aforementioned deed of conveyance was not lawfully
executed for want of a competent notary public and registrar of
the Bureau of Conveyance pursuant to Section 1267 and 1249,
respectively, of the Compiled Laws of the Hawaiian Kingdom.”
[Campbell Decl., Exh. 5 at 1-2.]
of law.

This argument fails as a matter

See, e.g., Baker v. Stehura, Civ. No. 09-00615 ACK-BMK,

2010 WL 3528987, at *4 (D. Hawai`i Sept. 8, 2010) (“Plaintiffs
argue that the foreclosure action is voidable because Hawai`i
courts do not have jurisdiction over them as residents of the
Kingdom of Hawai`i.

This argument has been rejected by the Ninth

Circuit as well as this Court on repeated occasions. . . . The
Hawai`i state courts have reached the same conclusion.” (some
citations omitted) (citing United States v. Lorenzo, 995 F.2d
1448, 1456 (9th Cir. 1993); Wang Foong v. United States, 69 F.2d
681, 682 (9th Cir. 1934))).

10

This Court has already found that Defendants did not
follow lawful procedure when they filed the Notice.

Moreover,

the Notice itself is based on an invalid legal argument.

In

filing the Notice, however, Defendants relied on representations
from Laulima Title, and were, thus, misled by a third party.
Therefore, this Court cannot conclude that the Notice is
“frivolous.”5
The Court FINDS that the Notice is not frivolous, and
DENIES the Motion as to Plaintiff’s request that the Court order
payment of $5,000 and enjoin Defendants from “filings of any kind
with the registrar” for five years.

See § 507D-7(b).

To the

extent that Plaintiff request attorneys’ fees and costs, the

5

To the extent that Plaintiff cites Olson v. Liu, Civ. No.
10-00691 ACK-RLP, 2012 WL 830288, at *1-2 (D. Hawai`i Mar. 8,
2012), for the proposition that, under § 507D-7(a)-(b),
“frivolous” must be determined using an objective standard, it
overstates the ruling. In Olson, the district court stated
“there is no guidance from Hawaii’s appellate courts[] whether
frivolousness in this context is determined objectively,” and,
further, the defendant in Olson “agree[d] that whether a lien is
frivolous must be determined using an objective standard.” Id.
at *1 (citation omitted). While the district court in Olson
discusses why, in its opinion, an objective standard adheres more
closely to the intent and purpose of the statute, it found that
the liens at issue in the case would be frivolous under both an
objective and subjective standard. Id. at *2. It is also worth
noting that the liens in Olson were determined to be invalid on
multiple occasions – a fact that is not present in the instant
matter. See id. (Explaining that “[e]very court to consider the
question has ruled that [d]efendants have no interest in the
Subject Property,” “two separate ejectment actions established
that [defendant] and his followers were not entitled to occupy
the Subject Property,” and “[defendant] has had at least two
criminal convictions for trespass on the Subject Property.”).
11

Court DECLINES to address this issue at this time.

After

judgment is entered on all claims, Plaintiff may move for
attorneys’ fees and costs pursuant to Fed. R. Civ. P. 54(d).
Finally, Plaintiff requests that the Court grant final
judgment as to Count 1.

[Motion at 3.]

In addition to Count 1,

Plaintiff seeks relief for Slander of Title (“Count 2”) and Quiet
Title (“Count 3”).

[Complaint at ¶¶ 23-27, 28-34.]

In Algal

Partners, L.P. v. Santos, this Court considered a request for
entry of final judgment on a quiet title claim when a slander of
title claim was still undecided.

Civil No. 13-00562, 2014 WL

2800771, at *3 (D. Hawai`i June 19, 2014).

This Court stated,

this is not a complex case or one where there is
an “important or controlling legal issue that cuts
across (and cuts out or at least curtails) a
number of claims.” See [Wood v. GCC Bend, LLC,
422 F.3d 873, 882 (9th Cir. 2005)] (footnote
omitted). This “similarity of legal [and] factual
issues [] weigh[s] heavily against entry of
judgment under [Rule 54(b)]. . . .” See id. (some
alterations in Wood) (citation and quotation marks
omitted). The Court thus finds that judgment
under Rule 54(b) in favor of Plaintiff is not “in
the interest of sound judicial administration,”
and may result in unnecessary piecemeal appeals.
See Curtiss-Wright[ Corp. v. Gen. Elec. Co., 446
U.S. 1, 8 (1980)]; see also, e.g., Wheeler v. Hilo
Med. Ctr., Inc., Civil No. 09-00533 JMS/KSC 2010
WL 4273095 (D. Hawai`i Oct. 21, 2010) (denying
separate judgment where court found substantial
factual and legal overlap and that the case was
not complex).
Id. (some alterations in original).

Here, too, the Court FINDS

that the case is not particularly complex, the legal and factual
issues are similar, and a grant of final judgment would not be
12

“in the interest of sound judicial administration.”
(citations and internal quotation marks omitted).

See id.

The Court,

therefore, DENIES the Motion as to Plaintiff’s request for entry
of final judgment.
CONCLUSION
On the basis of the foregoing, Plaintiff Federal Home
Loan Mortgage Corporation’s Motion for Summary Judgment on Count
1 of Plaintiff’s Complaint, filed August 20, 2015, is HEREBY
GRANTED IN PART AND DENIED IN PART.

The Motion is GRANTED

insofar as the Court ORDERS that the Notice, recorded with the
BOC as Document Number 2011-080312, be INVALIDATED AND EXPUNGED.
The Motion is DENIED as to:

(1) Plaintiff’s request that the

Court order payment of $5,000 and enjoin Defendants from filing
with the registrar for five years; (2) Plaintiff’s request for
attorneys’ fees and costs; and (3) Plaintiff’s request for entry
of final judgment.

The denial of the request for attorneys’ fees

and costs is without prejudice to the filing of the appropriate
motion after the entry of judgment on all claims.
IT IS SO ORDERED.

13

DATED AT HONOLULU, HAWAII, November 18, 2015.

/s/ Leslie E. Kobayashi
Leslie E. Kobayashi
United States District Judge

FEDERAL HOME LOAN MORTGAGE CORPORATION VS. SKYE KAPENAOKALANI
GRIEP, ET AL; CIVIL 15-00003 LEK-KSC; ORDER GRANTING IN PART AND
DENYING IN PART PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT ON COUNT
1 OF PLAINTIFF’S COMPLAINT

14