Whittington v. Bank of New York Mellon, The et al

Filing 26

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO DISMISS COMPLAINT FILED JANUARY 13, 2016 re 7 Motion to Dismiss for Failure to State a Claim. Signed by JUDGE LESLIE E. KOBAYASHI on 06/02/2016. This Court will allow Plaintiff to file a motion for leave to file an amended complaint reasserting the claims that this Court dismissed without prejudice. Plaintiff must attach a copy of her proposed amended complaint to the motion for leave to fi le an amended complaint. See Local Rule LR10.3 ("Any party filing or moving to file an amended complaint... shall reproduce the entire pleading as amended and may not incorporate any part of a prior pleading by reference, except with leave of co urt."). This Court ORDERS Plaintiff to file her motion for leave to file an amended complaint by July 5, 2016. The motion will be referred to the magistrate judge. This Court CAUTIONS Plaintiff that, if she fails to file her motion for leave to file an amended complaint by July 5, 2016, all of the claims that this Court dismissed without prejudice in this Order will be dismissed with prejudice, and this Court will direct the Clerk's Office to issue the final judgment and close the case. In other words, Plaintiff would have no remaining claims in this case. This Court also CAUTIONS Plaintiff that, even if the magistrate judge allows Plaintiff to file her proposed amended complaint, as to any claim that this Order dismissed without prejudice, the corresponding amended claim may be dismissed with prejudice if the amended claim fails to cure the defects identified in this Order. (eps )CERTIFICATE OF SERVICEParticipants re gistered 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 served by first class mail on the date of this docket entry

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
)
)
)
)
Plaintiff,
)
)
vs.
)
THE BANK OF NEW YORK MELLON
)
)
FKA BANK OF NEW YORK, AS
TRUSTEE FOR THE
)
CERTIFICATEHOLDERS OF CWMBS, )
)
INC., CHL MORTGAGE PASS)
THROUGH TRUST 2005-24,
)
MORTGAGE PASS-THROUGH 2005)
24, SHELLPOINT MORTGAGE
)
SERVICING, MORTGAGE
)
ELECTRONIC REGISTRATION
)
SYSTEMS, INC.,
)
)
Defendants.
_____________________________ )
DARYL JEAN KATSUKO
WHITTINGTON,

CIVIL 16-00014 LEK-KJM

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS’
MOTION TO DISMISS COMPLAINT FILED JANUARY 13, 2016
On March 28, 2016, Defendants The Bank of New York
Mellon, formerly known as Bank of New York, as trustee for the
Certificate Holders of CWMBS, Inc., CHL Mortgage Pass-Through
Certificates, Series 2005-24 (“BONY”); New Penn Financial LLC,
doing business as Shellpoint Mortgage Servicing (“Shellpoint”);
and Mortgage Electronic Registration Systems, Inc. (“MERS,” all
collectively “Defendants”) filed their Motion to Dismiss
Complaint Filed January 13, 2016 (“Motion”).

[Dkt. no. 7.]

Pro

se Plaintiff Daryl Jean Katsuko Whittington (“Plaintiff”) filed
her memorandum in opposition on May 4, 2016, and Defendants filed

their reply on May 13, 2016.1

[Dkt. nos. 20, 22.]

The Court has

found the Motion suitable for disposition without a hearing
pursuant to Rule LR7.2(d) of the Local Rules of Practice of the
United States District Court for the District of Hawai`i (“Local
Rules”).

[EO: Court Order Vacating Hearing on Defs.’ Motion to

Dismiss Complaint Filed January 13, 2016, filed 5/4/16 (dkt. no.
19); 5/5/16 EO at 2.]

After careful consideration of the Motion,

supporting and opposing memoranda, and the relevant legal
authority, Defendants’ Motion is HEREBY GRANTED IN PART AND
DENIED IN PART.

The Motion is GRANTED insofar as all of

Plaintiff’s claims are HEREBY DISMISSED.

The dismissal is WITH

PREJUDICE, except as to the two portions of Plaintiff’s claims
that are specifically identified in this Order.
BACKGROUND
Plaintiff filed this action in this district court
based on diversity jurisdiction.

[Complaint for 1) Breach of

Contract 2) Declaratory Relief (“Complaint”), filed 1/13/16 (dkt.
no. 1), at ¶ 13.]

According to the Complaint, Plaintiff is the

owner of a parcel of real property on Makaaoa Place in Honolulu,
Hawai`i (“the Property”).

[Id. at ¶ 1.]

1

On August 11, 2005,

Defendants filed their original reply on May 2, 2016,
[dkt. no. 18,] noting that Plaintiff had not filed a response to
the Motion. On May 5, 2016, this Court issued an entering order
(“5/5/16 EO”), stating that it would consider Plaintiff’s
memorandum in opposition even though it was untimely. [Dkt. no.
21.] The 5/5/16 EO allowed Defendants to file a reply to
Plaintiff’s memorandum in opposition.
2

Plaintiff and her husband, Jeffrey Alan Whittington, executed a
$650,000 promissory note (“Note”), secured by a mortgage on the
Property (“Mortgage”).

[Id. at ¶ 19.]

The original lender was

First Magnus Financial Corporation, an Arizona Corporation
(“First Magnus”), but the loan was later sold to a securitized
trust.2

[Id. at ¶¶ 21-22.]
Plaintiff’s first claim alleges breach of contract.

She alleges that BONY breached the Note “by failing to abide by
the Pooling and Servicing agreement [(“PSA”)] governing the
securitization procedure.”

[Id. at ¶ 23.]

Plaintiff also

alleges that Shellpoint, the loan servicer, [id. at ¶ 55,]
breached the Note “by failing to timely notify Plaintiff of a
change in the Loan characteristics” [id. at ¶ 24].

Further,

Plaintiff alleges that MERS is the original Nominee under the
Mortgage, and it “participa[ted] in the imperfect securitization
of the Note and the Mortgage” and failed to record, except on its
own website, the transfer of interest in her loan.

[Id. at

¶¶ 12, 25.]
The primary theories supporting Plaintiff’s breach of
contract claim are: 1) her Note and Mortgage are unenforceable
because the documents were separated at origination; 2) various
transfers of her loan are void because the transferring documents

2

Elsewhere in the Complaint, Plaintiff asserts that First
Magnus sold her Mortgage, but did not sell her Note. [Complaint
at ¶¶ 122-23.]
3

were not recorded in the State of Hawai`i Bureau of Conveyances
(“BOC”); 3) Defendants violated certain requirements of the PSA
which governs the BONY securitized trust (“Trust”) that her loan
was purportedly sold to; and 4) Defendants failed to provide her
with certain notices that were required under the Note and/or the
Mortgage.

The alleged violations of the PSA include the failure

to execute required assignments prior to the closing date of the
Trust and the failure to verify the Chain of Endorsements and the
Chain of Title.

She also argues that the securitization process

and MERS’s role in that process have clouded the issue of what
entity actually owns her loan.

Plaintiff therefore asserts that

Defendants do not actually own her loan, and none of them is the
beneficiary or the trustee under the Mortgage.

In other words,

there is no perfected chain of title between the loan originator
– First Magnus – and BONY – which claims to be the holder and
owner of Plaintiff’s Note and the beneficiary of her Mortgage.
She contends that the lack of a proper transfer of her loan to
BONY renders her Mortgage null and void, and therefore BONY does
not have any beneficial interest in the Property.
Plaintiff also attempts to allege violations of
specific provisions in the Note and Mortgage.

She points out

that paragraph 20 of the Mortgage allows the Note and Mortgage to
be sold, but she argues that paragraph 20 requires that they be
transferred together.

Thus, she alleges that the purported sale

4

of the loan without a recorded assignment of Mortgage was a
breach of the Mortgage.

Plaintiff points out that paragraph 16

of the Mortgage states that the Mortgage is governed by Hawai`i
law, which she argues requires that changes in the beneficial
ownership of a property be recorded, with the current addresses
of the mortgagees.

According to Plaintiff, the breaches of

paragraphs 16 and 20 render the Note and Mortgage void.
Plaintiff states that, in spite of Defendants’ breaches
of the loan agreement, she has performed all of her obligations.
Plaintiff argues that Defendants’ breaches were material and were
detrimental to her interest in the Property.

For all of these

reasons, Plaintiff alleges that Defendants do not have standing
either to enforce the Mortgage or to prosecute any action
regarding the Property.

She claims that, because of the various

breaches of the loan agreement by BONY and Shellpoint, “the
entire sum of $650,000.00 is now due” and she demands that BONY
and Shellpoint repay that amount.
Plaintiff’s second claim seeks a declaratory judgment
regarding the same issues she raised in her breach of contract
claim.

She seeks, inter alia, a declaratory judgment that:

1) the Mortgage is void because of the separation of the Note and
Mortgage and because of the failure to record the assignments;
2) BONY, its successors in interest, and/or its agents do not
have standing to enforce the Mortgage; and 3) Defendants do not

5

have standing to foreclose on the Property.

She states that

Defendants have already initiated a foreclosure action.

She also

seeks a declaratory judgment regarding the parties’ obligations
and interests in the Property.
In the instant Motion, Defendants ask this Court to
dismiss Plaintiff’s Complaint pursuant to Fed. R. Civ. P.
12(b)(6).3

They argue that Plaintiff does not state any claims

upon which relief can be granted because the securitization of
her Note does not give rise to any viable cause of action.
Defendants assert that the dismissal should be with prejudice
because it is not possible for Plaintiff to amend any of her
claims to state a viable cause of action.
DISCUSSION
I.

Splitting the Note
The Court first turns to Plaintiff’s argument regarding

the separation of the original Note from the Mortgage.

Based on

the factual allegations of the Complaint,4 First Magnus was the
3

Rule 12(b)(6) allows a party to bring a motion asserting
the defense of “failure to state a claim upon which relief can be
granted.” Defendants also bring their Motion pursuant to
Rule 12(e), which governs a motion for a more definite statement,
but this Court concludes that the Rule 12(b)(6) analysis is more
appropriate for the arguments raised in Defendants’ Motion. This
Court therefore will not address whether Defendants would be
entitled to relief pursuant to Rule 12(e).
4

For purposes of the instant Motion, this Court must
assume that all of the factual allegations in the Complaint are
true. However, this Court is “‘not bound to accept as true a
(continued...)
6

original lender, but the Note was eventually sold to BONY, which
asserts that it is the beneficiary of the Mortgage.

However,

since the time of the loan origination, MERS has held the
Mortgage as the Mortgagee and the lender’s Nominee.
at ¶¶ 21, 27, 40, 56-57.]

[Complaint

Plaintiff argues that separating the

Note and the Mortgage was a breach of the loan contract, and she
seeks a declaratory judgment that the separation rendered the
Note and Mortgage void.

Plaintiff’s claims fail to the extent

that they are based on this “splitting-the-note” theory.
The United States Bankruptcy Court for the District of
Hawai`i has stated: “Under Hawaii law, the security automatically
follows the obligation.

The party entitled to enforce a

promissory note secured by a mortgage may enforce the mortgage
regardless of whether the mortgage was separately assigned to
that party.”

In re Tyrell, 528 B.R. 790, 794-95 & n.13 (Bankr.

D. Hawai`i 2015) (citing In re The Mortgage Store, 509 B.R. 292,
296 (Bankr. D. Haw. 2014)).

In Mortgage Store, the bankruptcy

court stated: “the collateral follows the obligation.

A transfer

of a promissory note automatically transfers any security for
that note.”

509 B.R. at 296 & nn.10-11 (citing S.N. Castle

Estate v. Haneberg, 20 Haw. 123, 130 (Haw. 1910) (“The assignment

4

(...continued)
legal conclusion couched as a factual allegation.’” See Ashcroft
v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555, 127 S. Ct. 1955, 167 L. Ed. 2d 929
(2007)).
7

of the notes, however, of itself operated as a matter of law as
an assignment of the mortgage and of the mortgagee’s powers under
it.”)).

Thus, the fact that Plaintiff’s Mortgage was not

assigned to BONY simultaneously with the Note is irrelevant
because the transfer of the Note automatically transferred the
security for the Note.
Similarly, the Ninth Circuit has stated that splitting
a promissory note from the document securing it – e.g. a mortgage
or a deed of trust – “only renders the mortgage unenforceable if
MERS or the trustee, as nominal holders of the [security
instrument], are not agents of the lenders.”

Cervantes v.

Countrywide Home Loans, Inc., 656 F.3d 1034, 1044 (9th Cir.
2011).

If the holder of the security instrument is not the

lender’s agent, the promissory note and the security instrument
are “irreparably split.”
here.

Id.

However, that is not the case

Plaintiff’s Mortgage provides that MERS “is acting solely

as a nominee for Lender and Lender’s successors and assigns.
MERS is the mortgagee under this Security Instrument.”

[Motion,

Decl. of Andrew J. Lautenbach, Exh. A (Mortgage) at 2, ¶ C.5]

5

As a general rule, this Court’s scope of review in
considering a motion to dismiss is limited to the allegations in
the complaint. See Daniels-Hall v. Nat’l Educ. Ass’n, 629 F.3d
992, 998 (9th Cir. 2010). “[A] court may consider evidence on
which the complaint necessarily relies if: (1) the complaint
refers to the document; (2) the document is central to the
plaintiff’s claim; and (3) no party questions the authenticity of
the copy attached to the 12(b)(6) motion.” Id. (citations and
(continued...)
8

Thus, even though the Note was eventually sold to BONY, MERS
continues to have authority to act as the mortgagee because it is
the nominee for the successors and assigns of the original Lender
– First Magnus – and BONY is a successor and/or assign of First
Magnus.

This Court therefore FINDS that Plaintiff’s Note and

Mortgage are not irreparably split.
This Court CONCLUDES that, to the extent that
Plaintiff’s breach of contract claim is based on a “splitting the
note” theory, her claim fails to state a plausible claim for
relief.

See Iqbal, 556 U.S. at 678 (“To survive a motion to

dismiss, a complaint must contain sufficient factual matter,
accepted as true, to ‘state a claim to relief that is plausible
on its face.’” (quoting Twombly, 550 U.S. at 570, 127 S. Ct.
1955)).

This Court therefore GRANTS the Motion and DISMISSES

those portions of Plaintiff’s claims.

The dismissal is WITH

PREJUDICE because this Court CONCLUDES that it is absolutely

5

(...continued)
internal quotation marks omitted). Ordinarily, consideration of
other materials requires the district court to convert a motion
to dismiss into a motion for summary judgment. Yamalov v. Bank
of Am. Corp., CV. No. 10–00590 DAE–BMK, 2011 WL 1875901, at *7
n.7 (D. Hawai`i May 16, 2011) (citing Parrino v. FHP, Inc., 146
F.3d 699, 706 n.4 (9th Cir. 1998)).
Plaintiff’s Mortgage is not attached to her Complaint.
However, the Complaint refers to it, and it is central to
Plaintiff’s claims. Plaintiff has not questioned the
authenticity of the copy of the Mortgage that Defendants
submitted with the Motion. This Court therefore concludes that
it may consider the Mortgage without converting the Motion into a
motion for summary judgment.
9

clear that no amendment can cure the defects in those portions of
Plaintiff’s claims.

See Lucas v. Dep’t of Corr., 66 F.3d 245,

248 (9th Cir. 1995) (“Unless it is absolutely clear that no
amendment can cure the defect, . . . a pro se litigant is
entitled to notice of the complaint’s deficiencies and an
opportunity to amend prior to dismissal of the action.”).

In

other words, Plaintiff does not have the Court’s permission to
amend the portions of her claims based on the “splitting the
note” theory.
II.

Alleged Violations of the PSA and
Challenges to the Assignment of the Note
Both of Plaintiff’s claims also rely on her positions

that the Note and Mortgage are void because of violations of the
PSA and because of allegedly invalid assignments of the Note
and/or Mortgage.

Plaintiff, however, does not have standing

either to raise alleged violations of the PSA or to challenge the
validity of the assignments.

See Amina v. Bank of New York

Mellon, Civil No. 11-00714 JMS/BMK, 2015 WL 84760, at *8-9 (D.
Hawai`i Jan. 7, 2015) (“[I]t is well-established that a borrower,
who is a third party to the PSA and assignment, lacks standing to
challenge their validity.”).
Thus, this Court CONCLUDES that the portions of
Plaintiff’s claims based on alleged violations of the PSA fail to
state a plausible claim for relief.

Further, this Court

CONCLUDES that it is absolutely clear that no amendment can cure
10

the defects in these portions of Plaintiff’s claims.

This Court

GRANTS Defendants’ Motion insofar as the portions of Plaintiff’s
claims based on alleged violations of the PSA are DISMISSED WITH
PREJUDICE.
As to the portion of Plaintiff’s claims challenging the
validity of the assignments of the Note and/or Mortgage, this
Court recognizes that there is a narrow exception to the general
rule that a borrower – also referred to as a mortgagor – does not
have standing to challenge a mortgage assignment.

If a

plaintiff/borrower pleads facts in her complaint that support the
application of this exception, it would allow the borrower to
challenge the assignment.

This Court has stated:

[i]n Nottage [v. Bank of New York Mellon], . . .
this district court denied the defendant’s motion
to dismiss where the complaint asserted that, at
the time of the assignment, the assignor no longer
existed because it had been acquired by another
entity. [Civil No. 12–00418 JMS/BMK,] 2012 WL
5305506, at *4 [(D. Hawai`i Oct. 25, 2012)].
Similarly, in Billete [v. Deutsche Bank Nat’l
Trust Co., Civil No. 13-00061 LEK-KSC, 2013 WL
2367834 (D. Hawai`i May 29, 2013)], this Court
refused to dismiss the plaintiffs’ claim that the
assignment, subsequent foreclosure, and ejectment
were invalid because the complaint alleged that
the execution of the assignment occurred
approximately six months after the assignor’s
dissolution. 2013 WL 2367834, at *7.
Lowther v. U.S. Bank N.A., 971 F. Supp. 2d 989, 1012 (D. Hawai`i
2013) (some alterations in Lowther) (some citations omitted).
The reasons for the denial of the defendants’ motions to dismiss
in Billete and Nottage are not present in the instant case.
11

Plaintiff’s Complaint does not contain any factual allegations to
support a claim that, when First Magnus assigned Plaintiff’s
loan, it either did not exist or otherwise lacked standing to
assign the loan.

The Complaint merely makes allegations, based

on conclusory statements, that, because of the splitting of the
Note and Mortgage and because of the alleged violations of the
PSA, the assignments of the Note and/or Mortgage are invalid.
This Court therefore CONCLUDES that the portions of
Plaintiff’s claims challenging the validity oft the assignments
of her Note and/or Mortgage fail to state a plausible claim for
relief.

However, this Court CONCLUDES that it is arguably

possible for Plaintiff to cure the defects in these portions of
her claims, if she can allege facts that would support the
exception – described in Lowther – to the general rule that a
borrower does not have standing to challenge a mortgage
assignment.

Defendants’ Motion is GRANTED IN PART AND DENIED IN

PART as to Plaintiff’s claims challenging the validity of the
assignments, and those portions of her claims are DISMISSED
WITHOUT PREJUDICE.

In other words, Plaintiff has permission to

try to amend these portions of her claims to try to fix the
defects that this Court has identified in this Order.
III. Securitization in General and MERS’s Role as Mortgagee
Plaintiff’s claims are also based upon challenges to
the securitization process in general.

12

However, this district

court has recognized that:
As the majority of courts have held, grievances
regarding the securitzation [sic] 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
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.”)
Uy v. HSBC Bank USA, Nat’l Ass’n, Civ. No. 14-00261 HG-KSC, 2015
WL 1966689, at *5 (D. Hawai`i Apr. 30, 2015) (alteration in Uy).
This Court agrees, and also notes that, in the
Mortgage, Plaintiff expressly agreed to grant MERS the authority
to act on behalf of First Magnus and its successors and assigns.
See Mortgage at 3 (stating that “Borrower does hereby mortgage,
grant and convey to MERS (solely as nominee for Lender and
Lender’s successors and assigns) and to the successors and
assigns of MERS, with power of sale,” of the Property).

Hawai`i

courts have held that similar language “empower[s] MERS to take

13

action, including assigning the loan.”

See, e.g., Bank of Am.,

N.A. v. Reyes-Toledo, No. CAAP 15-0000005, 2016 WL 1092305, at *2
(Hawai`i Ct. App. Mar. 16, 2016).
Plaintiff challenges the fact that the assignments of
the Mortgage were not recorded in the BOC.

However, as a

practical matter, recording every assignment of a mortgage
between MERS members is not necessary because of the nature of
the MERS system.

The Ninth Circuit has described how the MERS

system functions:
MERS is a private electronic database,
operated by MERSCORP, Inc., that tracks the
transfer of the “beneficial interest” in home
loans, as well as any changes in loan servicers.
After a borrower takes out a home loan, the
original lender may sell all or a portion of its
beneficial interest in the loan and change loan
servicers. The owner of the beneficial interest
is entitled to repayment of the loan. For
simplicity, we will refer to the owner of the
beneficial interest as the “lender.” The servicer
of the loan collects payments from the borrower,
sends payments to the lender, and handles
administrative aspects of the loan. Many of the
companies that participate in the mortgage
industry — by originating loans, buying or
investing in the beneficial interest in loans, or
servicing loans — are members of MERS and pay a
fee to use the tracking system.
When a borrower takes out a home loan, the
borrower executes two documents in favor of the
lender: (1) a promissory note to repay the loan,
and (2) a deed of trust, or mortgage, that
transfers legal title in the property as
collateral to secure the loan in the event of
default. State laws require the lender to record
the deed in the county in which the property is
located. Any subsequent sale or assignment of the
deed must be recorded in the county records, as
14

well.
This recording process became cumbersome to
the mortgage industry, particularly as the trading
of loans increased. It has become common for
original lenders to bundle the beneficial interest
in individual loans and sell them to investors as
mortgage-backed securities, which may themselves
be traded. MERS was designed to avoid the need to
record multiple transfers of the deed by serving
as the nominal record holder of the deed on behalf
of the original lender and any subsequent lender.
At the origination of the loan, MERS is
designated in the deed of trust as a nominee for
the lender and the lender’s “successors and
assigns,” and as the deed’s “beneficiary” which
holds legal title to the security interest
conveyed. If the lender sells or assigns the
beneficial interest in the loan to another MERS
member, the change is recorded only in the MERS
database, not in county records, because MERS
continues to hold the deed on the new lender’s
behalf. If the beneficial interest in the loan is
sold to a non-MERS member, the transfer of the
deed from MERS to the new lender is recorded in
county records and the loan is no longer tracked
in the MERS system.
Cervantes, 656 F.3d at 1038-39.

Plaintiff has not identified,

nor is this Court aware of any, Hawai`i statute or case law that
requires every assignment of a recorded mortgage to be recorded,
even where the lender’s nominee – in this case, MERS – has not
changed.
This Court CONCLUDES that the portion of Plaintiff’s
claims challenging the securitization process in general and
MERS’s role as mortgagee fail to state a plausible claim for
relief.

Further, this Court CONCLUDES that it is absolutely

clear that no amendment can cure the defects in these portions of
15

Plaintiff’s claims.

This Court GRANTS Defendants’ Motion insofar

as Plaintiff’s claims challenging the securitization process in
general and MERS’s role as mortgagee are DISMISSED WITH
PREJUDICE.
IV.

Notice to Plaintiff
Finally, Plaintiff alleges that Defendants breached the

Note and Mortgage by failing to provide her with required
notices, including “by failing to notify Plaintiff of the change
in ownership of the Note and Mortgage.”

[Complaint at ¶ 153.]

Plaintiff also seeks a declaratory judgment that the Mortgage is
not enforceable because of these breaches.
Turning to Plaintiff’s breach of contract claim, this
Court has stated:
To state a claim for breach of contract, a
plaintiff must plead: (1) the contract at issue;
(2) the parties to the contract; (3) whether
plaintiff performed under the contract; (4) the
particular provision of the contract allegedly
violated by [d]efendant; and (5) when and how
[d]efendant allegedly breached the contract.
Leff v. Bertozzi Felice Di Giovanni Rovai & C. Srl, CIVIL NO. 1500176 HG-RLP, 2015 WL 9918660, at *5 (D. Hawai`i Dec. 30, 2015)
(alterations in Leff) (citations and internal quotation marks
omitted), report and recommendation adopted, 2016 WL 335850 (D.
Hawai`i Jan. 26, 2016).
Plaintiff has specifically alleged that Defendants
violated paragraph twenty of the Mortgage, although she made that

16

allegation in the context of her splitting the note argument.
[Complaint at ¶ 69.]

However, liberally construed, Plaintiff’s

Complaint also alleges that the failure to provide her with
proper notices of changes in the ownership of her loan.6
Paragraph twenty states, in pertinent part:
20. Sale of Note; Change of Loan Servicer;
Notice of Grievance. The Note or a partial
interest in the Note (together with this Security
Instrument) can be sold one or more times without
prior notice to Borrower. A sale might result in
a change in the entity (known as the “Loan
Servicer”) that collects Periodic Payments due
under the Note and this Security Instrument and
performs other mortgage loan servicing obligations
under the Note, this Security Instrument, and
Applicable Law. There also might be one or more
changes of the Loan Servicer unrelated to a sale
of the Note. If there is a change of the Loan
Servicer, Borrower will be given written notice of
the change which will state the name and address
of the new Loan Servicer, the address to which
payments should be made and any other information
[the Real Estate Settlement and Procedures Act]
requires in connection with a notice of transfer
of servicing. If the Note is sold and thereafter
the Loan is serviced by a Loan Servicer other than
the purchaser of the Note, the mortgage loan
servicing obligations to Borrower will remain with
the Loan Servicer or be transferred to a successor
Loan Servicer and are not assumed by the Note
purchaser unless otherwise provided by the Note
purchaser.

6

This Court must liberally construe Plaintiff’s pleadings
because she is proceeding pro se. See, e.g., Eldridge v. Block,
832 F.2d 1132, 1137 (9th Cir. 1987) (“The Supreme Court has
instructed the federal courts to liberally construe the ‘inartful
pleading’ of pro se litigants.” (citing Boag v. MacDougall, 454
U.S. 364, 365, 102 S. Ct. 700, 701, 70 L. Ed. 2d 551 (1982) (per
curiam))).
17

[Mortgage at 12.]

Thus, if the change in the ownership of

Plaintiff’s loan also resulted in a change in Plaintiff’s loan
servicer, and Defendants failed to provide her with the required
notices, she may be able to allege a plausible breach of contract
claim.

Plaintiff’s Complaint, however, does not contain specific

factual allegations regarding the circumstances of Defendants’
alleged breach of paragraph twenty.

To the extent that

Plaintiff’s breach of contract claim is based on upon the alleged
failure to provide notices of the changes in the ownership of her
loan, the Complaint fails to plead sufficient facts to support a
plausible claim for relief.
To the extent that Plaintiff’s breach of contract claim
is based upon the alleged failure to provide other types of
notices that the Note and/or Mortgage required, the claim fails
because Plaintiff has not pled any facts regarding the
circumstances of those portions of the claim, and because she has
not identified the particular provisions that Defendants
allegedly breached.

For the same reasons that the portions of

Plaintiff’s breach of contract claim based on the alleged failure
to provide required notices fail, the portions of her claim for
declaratory relief is based upon the same allegations also fail
to state a plausible claim for relief.
This Court GRANTS Defendants’ Motion insofar as the
portions of Plaintiff’s claims based on the alleged failure to

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provide required notices are DISMISSED.

The Motion is DENIED

insofar as this dismissal is WITHOUT PREJUDICE because this Court
CONCLUDES that it is arguably possible for Plaintiff to cure the
defects in these portions of her claims by amendment.
V.

Attempts to Allege Other Claims
This Court recognizes that Plaintiff may have intended

to allege other claims – or other theories supporting her breach
of contract claim and/or her declaratory relief claim – besides
those specifically addressed in this Order.

However, even

liberally construing Plaintiff’s Complaint, this Court cannot
discern a factual or legal basis for any claims or theories of
liability besides those previously discussed in this Order.

This

Court therefore does not construe the Complaint as alleging any
other claims besides the breach of contract claim and the
declaratory relief claim, and this Court does not construe the
Complaint as alleging any other theories of liability supporting
those two claims besides the theories specifically addressed in
this Order.
VI.

Summary and Leave to Amend
Defendants’ Motion is GRANTED insofar as all portions

of Plaintiff’s Complaint are HEREBY DISMISSED.

The Motion is

DENIED insofar as the following portions of Plaintiff’s breach of
contract claim and her declaratory relief claim are DISMISSED
WITHOUT PREJUDICE: 1) the portions of her claims challenging the
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validity of the assignments of her loan; and 2) the portions of
her claims based on the alleged failure to provide her with
notices required under the Note and/or Mortgage.

The Motion is

GRANTED insofar as all other portions of Plaintiff’s Complaint
are DISMISSED WITH PREJUDICE.
This Court will allow Plaintiff to file a motion for
leave to file an amended complaint reasserting the claims that
this Court dismissed without prejudice.

Plaintiff must attach a

copy of her proposed amended complaint to the motion for leave to
file an amended complaint.

See Local Rule LR10.3 (“Any party

filing or moving to file an amended complaint . . . shall
reproduce the entire pleading as amended and may not incorporate
any part of a prior pleading by reference, except with leave of
court.”).

This Court ORDERS Plaintiff to file her motion for

leave to file an amended complaint by July 5, 2016.

The motion

will be referred to the magistrate judge.
This Court CAUTIONS Plaintiff that, if she fails to
file her motion for leave to file an amended complaint by July 5,
2016, all of the claims that this Court dismissed without
prejudice in this Order will be dismissed with prejudice, and
this Court will direct the Clerk’s Office to issue the final
judgment and close the case.

In other words, Plaintiff would

have no remaining claims in this case.

This Court also CAUTIONS

Plaintiff that, even if the magistrate judge allows Plaintiff to
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file her proposed amended complaint, as to any claim that this
Order dismissed without prejudice, the corresponding amended
claim may be dismissed with prejudice if the amended claim fails
to cure the defects identified in this Order.
CONCLUSION
On the basis of the foregoing, Defendants’ Motion to
Dismiss Complaint Filed January 13, 2016, which Defendants filed
on March 28, 2016, is HEREBY GRANTED IN PART AND DENIED IN PART,
as set forth supra Discussion Section VI.

Plaintiff must file

her motion for leave to file an amended complaint by July 5,
2016, and the motion must comply with the rulings in this Order.
IT IS SO ORDERED.
DATED AT HONOLULU, HAWAII, June 2, 2016.

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

DARYL JEAN KATSUKO WHITTINGTON VS. THE BANK OF NEW YORK MELLON,
ET AL; CIVIL 16-00014 LEK-KJM; ORDER GRANTING IN PART AND DENYING
IN PART DEFENDANTS’ MOTION TO DISMISS COMPLAINT FILED JANUARY 13,
2016

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