Chung v. U.S. Bank, N.A.

Filing 84

ORDER GRANTING DEFENDANTS' MOTION FOR JUDGMENT ON THE PLEADINGS ON COUNT II OF THE COMPLAINT AND GRANTING IN PART AND DENYING IN PART PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT re 45 Motion for Partial Summary Judgment; re [ 48] Motion for Judgment on the Pleadings. Signed by JUDGE ALAN C. KAY on 04/17/2017. (eps, )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).

FILED IN THE
UNITED STATES DISTRICT COURT
DISTRICT OF HAWAII

Apr 17, 2017

IN THE UNITED STATES DISTRICT COURT
SUE BEITIA, CLERK
FOR THE DISTRICT OF HAWAII
___________________________________
)
HEEJOON CHUNG,
)
)
Plaintiff,
)
)
v.
) Civ. No. 16-00017 ACK-RLP
)
U.S. BANK, N.A., Trustee, under
)
Securitization Servicing Agreement )
dated as of December 1, 2005,
)
Structured Asset Investment Loan
)
Trust Mortgage Pass-Through
)
Certificates, Series 2005-11; and )
OCWEN LOAN SERVICING, LLC,
)
)
Defendants.
)
___________________________________)

ORDER GRANTING DEFENDANTS’ MOTION FOR JUDGMENT ON THE PLEADINGS
ON COUNT II OF THE COMPLAINT AND GRANTING IN PART AND DENYING IN
PART PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT

1

TABLE OF CONTENTS
PROCEDURAL BACKGROUND...........................................4
FACTUAL BACKGROUND..............................................7
STANDARD........................................................9
I.

Judgment on the Pleadings ...............................9

II.

Summary Judgment ......................................11

DISCUSSION.....................................................13
I.

Defendants’ Motion for Judgment on the Pleadings as to
Count II of the Complaint ..............................13
a. Whether the Claim is Time-Barred Under Haw. Rev. Stat.
Chapter 480..........................................13
b. Whether the SCRA Provides a Cognizable Basis for
Plaintiff’s UDAP Claim...............................26
c. Whether Count II is Insufficiently Pled to the Extent
it is Based on the 2015 Communications or Any Other
Conduct..............................................31

II.

Plaintiff’s Motion for Partial Summary Judgment ........36
a. FDCPA Claim..........................................36
i. Whether Plaintiff Establishes that the Loan was a
Personal Debt...................................37
ii. Whether Ocwen is a “Debt Collector”.............41
iii. Whether Defendants Violated the FDCPA...........49
1. Whether Defendants Violated the FDCPA When they
Demanded Different Amounts Owed on the Same
Date .........................................49
2. Whether Defendants’ Alleged “Gamesmanship” in
the Instant Litigation Violated the FDCPA ....52
3. Whether Defendants Violated the FDCPA for
Sending Plaintiff Letters After They Knew He
was Represented by an Attorney ...............54

2

4. Whether Defendants Violated the FDCPA by
Improperly Charging Late Fees, Insurance
Charges, and Attorney’s Fees .................58
5. Whether Defendants Violated the FDCPA by
Reporting False Credit Information ...........58
6. Whether Defendants Violated the FDCPA by
Attempting to Collect on the Alleged Debt, Even
Though They Knew it was Time-Barred ..........59
iv. Whether the Bona Fide Error Defense Applies.....62
b. UDAP Claim...........................................63
c. Negligence and Negligent Misrepresentation Claims....65
CONCLUSION.....................................................65

3

For the reasons set forth below, the Court GRANTS
Defendants’ Motion for Judgment on the Pleadings on Count II of
the Complaint.

The Court DISMISSES Count II of the Complaint

WITHOUT PREJUDICE.

The Court GRANTS IN PART and DENIES IN PART

Plaintiff Heejoon Chung’s Motion for Partial Summary Judgment.
PROCEDURAL BACKGROUND
On January 18, 2016, Plaintiff Heejoon Chung
(“Plaintiff”) filed a Complaint for Damages and Injunctive
Relief (“Complaint”) against Defendants U.S. Bank, N.A. Trustee,
Under Securitization Servicing Agreement dated as of December 1,
2005, Structured Asset Investment Loan Trust Mortgage PassThrough Certificates, Series 2005-11 (“U.S. Bank”) and Ocwen
Loan Servicing, LLC (“Ocwen,” and together with U.S. Bank,
“Defendants”).

ECF No. 1.

Plaintiff asserts that Defendants

made false and misleading representations in connection with a
non-judicial foreclosure on real property located at 91-743
Ihipehu Street, Ewa Beach, Hawaii 96706 (“Property”), and later
attempted to collect a debt from him despite purporting to
release him from such debt upon foreclosure.
63, 67.

Id. ¶¶ 12, 27, 30

Plaintiff alleges: (1) violations of the Fair Debt

Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692; (2) unfair
or deceptive acts or practices (“UDAP”) in violation of the
Hawaii Revised Statutes (“Haw. Rev. Stat.”), Chapter 480 and the

4

Servicemembers Civil Relief Act (“SCRA”); (3) negligent
misrepresentation; and (4) negligence.

Id. ¶¶ 48-70.

In Count I of his Complaint, Plaintiff predicates his
FDCPA claim on conduct occurring within the year prior to the
filing of the case.

Id. ¶ 50.

15 U.S.C. §§ 1692c-g.

Plaintiff alleges violations of

Id. ¶¶ 48-56.

In Count II of his

Complaint, Plaintiff alleges UDAP violations under provisions of
Haw. Rev. Stat. Chapter 480 and the SCRA based on events in 2005
and 2010.

Id. ¶¶ 59-60.

Plaintiff specifically predicates his

UDAP claim on the following statutes: (1) 50 U.S.C. § 521; (2)
Haw. Rev. Stat. § 667-1, et seq.; (3) Haw. Rev. Stat. § 480D-1,
et. seq.; (4) Haw. Rev. Stat. § 443B-1, et. seq.; (5) Haw. Rev.
Stat. § 480-1, et seq.; (6) Haw. Rev. Stat. § 480-2; and (7)
Haw. Rev. Stat. § 480-12.

Id. ¶¶ 57-61.

Defendants filed an

Answer to the Complaint on February 23, 2016 responding to the
allegations in the Complaint and asserting various affirmative
defenses.

ECF No. 13.
On July 11, 2016, Plaintiff filed a Motion for

Judgment on the Pleadings and Memorandum in Support of Motion
“based upon the failure of Defendants to truthfully respond to
the allegations of the Complaint.”

ECF No. 24-1 at 1.

Court denied Plaintiff’s Motion on September 6, 2016.
32.

The
ECF No.

On September 9, 2016, Defendants filed a Motion for Leave

to file a First Amended Answer, Counterclaim, and Third Party
5

Complaint.

ECF No. 33.

ECF No. 35.

Plaintiff opposed Defendants’ request.

Defendants filed a First Amended Answer,

Counterclaim, and Third Party Complaint on October 5, 2016.
No. 37.

ECF

On November 1, 2016, the Magistrate Judge entered an

order granting in part and denying in part Defendants’ Motion
for Leave to File a First Amended Answer, Counterclaim, and
Third Party Complaint.

ECF No. 43.

On November 9, 2016, Defendants filed a Motion for
Judgment on the Pleadings on Count II of the Complaint
(“Defendants’ Motion”).

ECF No. 48.

On February 27, 2017,

Plaintiff filed an Opposition to Defendants’ Motion for Judgment
on the Pleadings (“Plaintiff’s Opposition”).

ECF No. 66.

On

March 6, 2017, Defendants filed their Reply to Plaintiff’s
Opposition (“Defendants’ Reply”).

ECF No. 70.

On March 8, 2017, the Court ordered supplemental
briefing on whether 50 U.S.C. § 3936 would apply to the statute
of limitations issue raised in Defendants’ Motion.

ECF No. 71.

On March 14, 2017, both parties filed Memorandum addressing this
issue.

ECF Nos. 73, 74.
Separately, on November 9, 2016, Plaintiff filed a

Motion for Partial Summary Judgment (“Plaintiff’s Motion”) on
all claims, reserving the damages determination (ECF No. 45),
along with a Concise Statement of Facts in support of his Motion
(“Pl.’s CSF in Supp.”).

ECF No. 46.
6

On February 27, 2017,

Defendants filed an Opposition to Plaintiff’s Motion for Partial
Summary Judgment (“Defendants’ Opposition”) (ECF No. 67), along
with a Separate and Concise Statement of Facts (“Defs.’ CSF in
Opp’n”).

ECF No. 68.

On March 6, 2017, Plaintiff filed a Reply

to Defendants’ Opposition (“Plaintiff’s Reply”).

ECF No. 69.

The Court held a hearing on Defendants’ and
Plaintiff’s Motions on March 20, 2017 at 11:00 a.m.

At the

hearing, the Court asked Defendants to file a full version of
the Asset Purchase Agreement, which was Exhibit 1 of Defendants’
Separate and Concise Counterstatement of Facts.
thereafter filed the full agreement.

Defendant

ECF No. 76.

then gave Plaintiff an opportunity to respond.

The Court

ECF No. 77.

Plaintiff filed a Memorandum responding to the full document on
March 24, 2017.

ECF No. 78.
FACTUAL BACKGROUND

On October 4, 2005, Plaintiff purchased the Property.
Complaint ¶ 12.

The purchase was made with funds obtained from

BNC Mortgage, Inc. (“BNC”), which was a loan secured by a first
mortgage on the Property and later transferred to U.S. Bank on
March 10, 2010.
B2, D.

Complaint ¶ 13; Pl.’s CSF in Supp., Exs. B1,

Plaintiff alleges, upon information and belief, that

there were various irregularities in the loan process with BNC,
including failure to provide proper disclosures, an improper
signing location, and failure to provide copies of the loan
7

documents.

Complaint ¶¶ 16-19, 22.

Several days after closing,

Plaintiff entered into a second mortgage loan on the Property.
Id. ¶ 21.
HomEq Servicing (“HomEq”) originally handled the loan
servicing.

Pl.’s CSF in Supp., Ex. C.

On April 15, 2009, HomEq

sent Plaintiff a letter advising him of his default on the loan,
which Plaintiff did not receive.

Complaint ¶ 24; Pl.’s CSF in

Supp., Chung Decl. ¶ 18.
Plaintiff alleges that the mortgage was non-judicially
foreclosed through a public auction conducted on July 8, 2010.
Complaint ¶ 27; Pl.’s CSF in Supp., Ex. E ¶ 5j.

A Mortgagee’s

Affidavit of Foreclosure Under Power of Sale (“Affidavit”) was
recorded in the Land Court on August 3, 2010.
Pl.’s CSF in Supp., Ex. E.

Complaint ¶ 27;

The Affidavit erroneously stated

that Plaintiff was not on active military duty at the time of
foreclosure when, in fact, a report attached as an exhibit to
the affidavit indicates that he was on active military duty from
November 3, 1995 with no end date.
CSF in Supp., Ex. E.

Complaint ¶¶ 31-32, Pl.’s

Plaintiff was stationed in South Carolina

in 2010 and alleges that he did not receive notice of the nonjudicial foreclosure during that time.

Complaint ¶ 28.

Due to a problem with recording the deed, however,
title to the Property never passed to U.S. Bank but remained in

8

Plaintiff’s name.

Pl.’s CSF in Supp., Chung Decl. ¶ 33; Defs.’

CSF in Opp’n, Flannigan Decl. ¶ 14.
Ocwen began servicing the loan in 2010.
Opp’n, Ex. 1.

Defs.’ CSF in

In July 2015, Ocwen sent Plaintiff letters

stating that the loan was delinquent as of March 2, 2009 and
that the current amount due on the loan exceeded $216,000.
Complaint ¶¶ 36-38; Pl.’s CSF in Supp., Exs. G, H.

Shortly

thereafter, Plaintiff contacted an attorney and first learned of
the non-judicial foreclosure.

Pl.’s CSF in Supp., Chung Decl. ¶

23.
Plaintiff was on “Active Duty Status” in the U.S. Army
from November 3, 1995 until November 2015.

Complaint ¶¶ 3, 11;

Plaintiff’s Reply, Exhibit A (Plaintff’s Depo.) at 198.
STANDARD
I.

Judgment on the Pleadings
Under Federal Rule of Civil Procedure 12(c), “[a]fter

the pleadings are closed—but early enough not to delay trial—a
party may move for judgment on the pleadings.”

Judgment on the

pleadings is properly granted “when, accepting all factual
allegations in the complaint as true, there is no issue of
material fact in dispute, and the moving party is entitled to
judgment as a matter of law.”

Chavez v. United States, 683 F.3d

1102, 1108 (9th Cir. 2012) (citation and original alteration
omitted).
9

Analysis under Rule 12(c) is substantially identical
to analysis under Rule 12(b)(6) because, under both rules, a
court must determine whether the facts alleged in the complaint,
taken as true, entitle the plaintiff to a legal remedy.

Id.

The Court must therefore assess whether the complaint
“contain[s] sufficient factual matter, accepted as true, to
‘state a claim to relief that is plausible on its face.’”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 570 (2007)); see also Harris v.
Cty. of Orange, 682 F.3d 1126, 1131 (9th Cir. 2012) (Iqbal
applies to Rule 12(c) motions because Rule 12(b)(6) and Rule
12(c) motions are functionally equivalent).
Judgment on the pleadings under Rule 12(c) is limited
to material included in the pleadings, unless the Court elects
to convert the motion into one for summary judgment.

Yakima

Valley Mem’l Hosp. v. Dep’t of Health, 654 F.3d 919, 925 n.6
(9th Cir. 2011).

Rule 12(d) gives the Court “discretion to

accept and consider extrinsic materials offered in connection
with these motions, and to convert the motion to one for summary
judgment when a party has notice that the district court may
look beyond the pleadings.”

Hamilton Materials, Inc. v. Dow

Chem. Corp., 494 F.3d 1203, 1207 (9th Cir. 2007).
The Court must accept as true the facts as pled by the
non-movant, and will construe the pleadings in the light most
10

favorable to the nonmoving party.

U.S. ex rel. Cafasso v. Gen.

Dynamics C4 Sys., Inc., 637 F.3d 1047, 1053 (9th Cir. 2011);
Doyle v. Raley’s Inc., 158 F.3d 1012, 1014 (9th Cir. 1998).
Additionally, mere conclusory statements in a complaint or
“formulaic recitation[s] of the elements of a cause of action”
are not sufficient.

Twombly, 550 U.S. at 555.

Thus, the Court

discounts conclusory statements, which are not entitled to a
presumption of truth, before determining whether a claim is
plausible.

Iqbal, 556 U.S. at 678.

However, “dismissal with

prejudice and without leave to amend is not appropriate unless
it is clear on de novo review that the complaint could not be
saved by amendment.”

Harris v. Cty. of Orange, 682 F.3d 1126,

1131 (9th Cir. 2012) (citation omitted).
II.

Summary Judgment
Summary judgment is proper where there is no genuine

issue of material fact and the moving party is entitled to
judgment as a matter of law.

Fed. R. Civ. P. 56(a).

Rule 56(a)

mandates summary judgment “against a party who fails to make a
showing sufficient to establish the existence of an element
essential to the party’s case, and on which that party will bear
the burden of proof at trial.”

Celotex Corp. v. Catrett, 477

U.S. 317, 322 (1986); see also Broussard v. Univ. of Cal. at
Berkeley, 192 F.3d 1252, 1258 (9th Cir. 1999).

11

“A party seeking summary judgment bears the initial
burden of informing the court of the basis for its motion and of
identifying those portions of the pleadings and discovery
responses that demonstrate the absence of a genuine issue of
material fact.”

Soremekun v. Thrifty Payless, Inc., 509 F.3d

978, 984 (9th Cir. 2007) (citing Celotex, 477 U.S. at 323); see
also Jespersen v. Harrah’s Operating Co., 392 F.3d 1076, 1079
(9th Cir. 2004).

“When the moving party has carried its burden

under Rule 56 [(a)] its opponent must do more than simply show
that there is some metaphysical doubt as to the material facts
[and] come forward with specific facts showing that there is a
genuine issue for trial.”

Matsushita Elec. Indus. Co. v. Zenith

Radio, 475 U.S. 574, 586-87 (1986) (citation and internal
quotation marks omitted); see also Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 247-48 (1986) (stating that a party cannot
“rest upon the mere allegations or denials of his pleading” in
opposing summary judgment).
“An issue is ‘genuine’ only if there is a sufficient
evidentiary basis on which a reasonable fact finder could find
for the nonmoving party, and a dispute is ‘material’ only if it
could affect the outcome of the suit under the governing law.”
In re Barboza, 545 F.3d 702, 707 (9th Cir. 2008) (citing
Anderson, 477 U.S. at 248).

When considering the evidence on a

motion for summary judgment, the court must draw all reasonable
12

inferences on behalf of the nonmoving party.

Matsushita Elec.

Indus. Co., 475 U.S. at 587; see also Posey v. Lake Pend Oreille
Sch. Dist. No. 84, 546 F.3d 1121, 1126 (9th Cir. 2008) (stating
that “the evidence of [the nonmovant] is to be believed, and all
justifiable inferences are to be drawn in his favor”).
DISCUSSION
I.

Defendants’ Motion for Judgment on the Pleadings as to
Count II of the Complaint
a. Whether the Claim is Time-Barred Under Haw. Rev. Stat.
Chapter 480
Defendants argue that Plaintiff’s claims under Haw.

Rev. Stat. § 480—based on the origination of his loan in October
2005 and representations made about Plaintiff’s military status
during the non-judicial foreclosure conducted in August 2010—are
time barred.1

Under Haw. Rev. Stat. § 480-24, “Any action to

1

Plaintiff’s complaint pleads a UDAP claim related both to
the 2005 mortgage transaction and the 2010 misrepresentation.
Complaint ¶¶ 59-60. In Plaintiff’s Opposition, he states that
his UDAP claim does not relate to the 2005 mortgage transaction.
ECF No. 66 at 5. However, at the Court’s hearing, Plaintiff
stated that he was not pursuing this claim on summary judgment
but reserved it for trial. The Court, therefore, will not
dismiss Plaintiff’s UDAP claim to the extent it is predicated on
the 2005 mortgage.
In his Opposition, Plaintiff also claims that his UDAP
claim includes allegations that: (1) Defendants did not properly
notify him of the foreclosure; and (2) collection demands from
Defendants in 2015 improperly conflicted with each other and
with the Affidavit that the loan was satisfied and released.
ECF No. 66 at 5, 20. Plaintiff also incorporates evidence from
his Motion for Partial Summary Judgment for purposes of his
Opposition to Defendants’ Motion. ECF No. 66 at 1.
(continued . . . )
13

enforce a cause of action arising under [Chapter 480] shall be
time barred unless commenced within four years after the cause
of action accrues . . . a cause of action for a continuing
violation is deemed to accrue at any time during the period of
the violation.”
Defendants argue that the occurrence rule, which
states that a cause of action accrues upon the occurrence of the
alleged violation, applies.

On the other hand, Plaintiff argues

that the discovery rule, which states that a cause of action
accrues when the plaintiff discovers the harm, applies.

The

Court holds that a UDAP cause of action accrues, pursuant to
Haw. Rev. Stat. § 480-24, four years from the date of the
occurrence of the violation, as opposed to Plaintiff’s discovery
of the violation.

See McDevitt v. Guenther, 522 F. Supp. 2d

1272, 1289 (D. Haw. 2007) (Kay, J.)

(“The Court holds that the

applicable rule governing the statute of limitations for claims
arising under Haw. Rev. Stat. § 480-2 is the occurrence rule.”);
see also In re Sumbillo, No. AP 1490052, 2015 WL 5162466, at *2
(D. Haw. Sept. 1, 2015) (noting that “[j]udges in this District
Court for the past thirty-five years [have applied the
occurrence rule] in determining when a cause of action accrues

As discussed herein, the Court will not consider
allegations and facts that have not been pled in the complaint
in deciding the instant Rule 12(c) motion.
14

under Chapter 480”); Lowther v. U.S. Bank N.A., 971 F. Supp. 2d
989, 1003 (D. Haw. 2013) (applying the occurrence rule);
Rundgren v. Bank of N.Y. Mellon, No. CIV 10-00252 JMS/LEK, 2010
WL 4066878, at *6 (D. Haw. Oct. 14, 2010) (same).
The Court is not persuaded by Plaintiff’s argument
that the discovery rule is now the standard in Hawaii.
Plaintiff argues that two cases invoking the discovery rule
apply here: Schmidt v. HSC, Inc., 131 Haw. 497, 503, 319 P.3d
416, 422 (2014) and Leibert v. Fin. Factors, Ltd., 71 Haw. 285,
286, 788 P.2d 833, 835 (1990).

However, neither case considered

a UDAP claim under Chapter 480; Schmidt involved a Hawaii law
related to fraudulent transfer, and Leibert involved a Hawaii
law related to fraudulent concealment.

In addition, Plaintiff’s

argument—that a case cited by Defendants, Reyes v. HSBC Bank
USA, Nat. Ass’n, 135 Haw. 407, 353 P.3d 410 (Haw. Ct. App.
2015), is unpersuasive because it does not discuss the holding
in Schmidt—is of no consequence because Schmidt does not apply
here.
Plaintiff also relies on February 5, 2016 and July 11,
2016 orders and a hearing transcript in Kane v. Deutsche Bank
Nat. Trust Co., Adv. No. 15-90045 (Bankr. D. Haw. 2016).

The

Kane court held that the statute of limitations does not bar a
claim under Haw. Rev. Stat. § 480-12, a provision which voids a
contract that violates Chapter 480, because it is a defense and
15

to bar such claims would result in a void contract becoming “unvoid” due to the mere lapse of time.

However, the Kane court

did not rely on any authority for this assertion and also stated
that it was merely predicting how the Hawaii state courts would
hold.

In addition, contrary authority exists.

See Rundgren v.

Bank of N.Y. Mellon, Civ. No. 10-00252 JMS/LEK, 2010 WL 4066878,
at *6 (D. Haw. Oct. 14, 2010) (“[Section] 480–24’s four-year
statute of limitations, which extends to any action to enforce a
cause of action arising under this chapter, also applies to §
480–12.” (internal quotation marks and original alteration
omitted)).2

The Court, therefore, declines to follow Kane and

holds that the occurrence rule applies.
Because the occurrence rule applies, the Court must
determine when the violation occurred.

A violation does not

occur until all the elements of a claim have occurred, including
injury and damages.

In re Sumbillo, Civ. No. 15-00125 JMS-BMK,

2015 WL 5162466, at *3 (D. Haw. Sept. 1, 2015).

Without citing

any authority, Plaintiff argues that injury and damage did not
occur until after Plaintiff received the demand letters from
2

Plaintiff also argues that Pac. Concrete Fed. Credit Union
v. Kauanoe, 62 Haw. 334, 614 P.2d 936 (1980) applies here. In
Pac. Concrete, the Hawaii Supreme Court held that the Truth in
Lending Act (“TILA”) claims could be brought via recoupment even
though the statute of limitations had run. However, the Court
declines to follow Pac. Concrete because the current case
involves UDAP claims under Chapter 480 of the Haw. Rev. Stat.
and not TILA.
16

Ocwen in 2015 and incurred damages in determining his rights.
This, however, would be the date Plaintiff discovered the injury
and not the date when the injury and damages occurred.
The Court finds that any injury and damages in this
case would have occurred on the only two dates pled in
Plaintiff’s complaint related to the UDAP claim—the date of the
loan transactions on October 4, 2005 and the Affidavit, which
was filed on August 3, 2010.

See id. at *3 (“[C]ontrary to

Deutsche Bank’s argument that the injury and damages both
occurred when the notice was published—the Sumbillos could not
have been injured or damaged at least until the date of the
auction on August 26, 2010.”); Uyeshiro v. Irongate Azrep BW
LLC, Civ. No. 13-00043 ACK-BMK, 2014 WL 414219, at *15 (D. Haw.
Feb. 3, 2014) (Kay, J.) (stating that the conduct at issue
occurred when the sales contract was executed); Ramos v. Chase
Home Fin., 810 F. Supp. 2d 1125, 1128, 1139 (D. Haw. 2011)
(holding that the claim accrued on the date the loan transaction
was consummated).3

Because Plaintiff did not file his complaint

3

Plaintiff incorrectly asserts that In re Sumbillo, Civ.
No. 15-00125 JMS-BMK, 2015 WL 5162466, at *3 (D. Haw. Sept. 1,
2015) states that the claim did not accrue until Plaintiff
learned of the unfair and deceptive acts.
Plaintiff also alleges that there were additional damages
that occurred later, such as Plaintiff’s forced retirement,
which should change the time from when the claim starts to
accrue. In addition, Plaintiff states that the false affidavit,
which has never been withdrawn, continues to harm him. However,
(continued . . . )
17

until January 19, 2016, approximately 10 years and 3 months
after the October 2005 loan transaction and five years and six
months after the July 2010 foreclosure, the claim is time-barred
unless there is a basis for tolling the statute of limitations.
Plaintiff argues that the limitations period should be
tolled because Defendants failed to serve Plaintiff with notice
of foreclosure, and Plaintiff did not learn of the foreclosure
of his home and the Affidavit stating that he was not in the
military until 2015.

Plaintiff further alleges that when

Defendants sent a letter to Plaintiff demanding payment in 2015,
they continued to conceal their foreclose proceedings.
Plaintiff cites to Rundgren v. Bank of N.Y. Mellon, 777 F. Supp.
2d 1224 (D. Haw. 2011) to support his claim.

In Rundgren, the

Court held that equitable tolling may be appropriate in a Haw.
Rev. Stat. § 480 claim where there has been fraudulent
concealment.

See id. at 1231 (construing “HRS Ch. 480 in

accordance with federal cases interpreting similar federal

because Plaintiff alleged discrete acts in 2005 and 2010, the
effect of which he continues to experience, and not a continuing
pattern and course of conduct, the date from which the statute
of limitations starts to accrue should not be modified. See
Flynn v. Marriott Ownership Resorts, Inc., 165 F. Supp. 3d 955,
966 (D. Haw. 2016) (holding that because Plaintiffs alleged a
discrete act, the effect of which Plaintiffs continue to
experience, and not a continuing pattern and course of conduct,
the continuing violation doctrine did not apply and the date
from which the statute of limitations began to accrue did not
change based on this later conduct).
18

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”).
Equitable tolling may be applied if, despite all due
diligence, a plaintiff is unable to obtain vital information
bearing on the existence of his claim.

See O’Donnell v. Vencor,

Inc., 465 F.3d 1063, 1068 (9th Cir. 2006) (“Equitable tolling is
generally applied in situations where the claimant has actively
pursued his judicial remedies by filing a defective pleading
during the statutory period, or where the complainant has been
induced or tricked by his adversary’s misconduct into allowing
the filing deadline to pass.” (internal quotation marks and
citation omitted)).

Plaintiff must allege facts that, if

proven, would support a finding that Defendant took affirmative
steps to conceal the causes of action from Plaintiff.

Lowther

v. U.S. Bank N.A., 971 F. Supp. 2d 989, 1002 (D. Haw. 2013).
Plaintiff must also allege facts that show his due diligence in
trying to uncover the facts.

Rutledge v. Boston Woven Hose &

Rubber Co., 576 F.2d 248, 250 (9th Cir. 1978).

A plaintiff must

plead with particularity the circumstances surrounding the
concealment.

389 Orange St. Partners v. Arnold, 179 F.3d 656,

662 (9th Cir. 1999); Rutledge, 576 F.2d at 250.

19

The facts pled in Plaintiff’s Complaint do not plead—
much less with particularity—any basis for fraudulent
concealment.

The Complaint does not allege any facts related to

an allegation that Defendants actively hid the foreclosure from
Plaintiff or prevented Plaintiff from discovering the alleged
claim following a diligent inquiry.

Defendants’ failure to

notify Plaintiff of the non-judicial foreclosure does not
constitute an affirmative action of concealment.

Indeed, on

April 15, 2009, HomEq sent Plaintiff a letter to his last known
address stating that Plaintiff was in default and that the
mortgage on the Property would be foreclosed if HomEq did not
receive payment from him within 65 days.

Complaint, Ex. C.

Further, Defendants published notice of the pending foreclosure,
hardly concealing it.

Remarkably, the Affidavit erroneously

stated that Plaintiff was not in the military despite the
Affidavit’s attachment showing that Plaintiff was in fact in the
military.
Moreover, the fact that “Plaintiff sought to obtain
[copies of the original loan] documents from Defendants without
success” does not provide the necessary facts to plead a claim
of fraudulent concealment with particularity because it does not
allege that Defendants were actively trying to conceal documents
from the Plaintiff.

ECF No. 66 at 12.

Plaintiff also has not

alleged facts detailing a diligent inquiry.
20

Therefore, the Court finds that Plaintiff has failed
to allege facts that would justify tolling the statute of
limitations on grounds of fraudulent concealment.

See Rundgren

v. Bank of N.Y. Mellon Corp., 637 F. App’x 404, 405 (9th Cir.
2016) (“Rundgren has not shown that Defendants actively
concealed the material elements of her claim or prevented her
from discovering her claim following a duly diligent inquiry . .
. Accordingly, Rundgren’s 2010 action—brought more than five
years after the accrual of her Chapter 480 claim—is timebarred.”).
However, the Court finds that Plaintiff can toll the
statute of limitations under the SCRA.4

The SCRA was passed “to

enable [servicemembers] to devote their entire energy to the
defense needs of the Nation.”

50 U.S.C. § 3902(1).

To

accomplish this objective, the SCRA includes a provision for
tolling statutes of limitations.

See 50 U.S.C. § 3936(a).

This

provision states:
The period of a servicemember’s military
service may not be included in computing any
period limited by law, regulation, or order
for the bringing of any action or proceeding
in a court, or in any board, bureau,
commission, department, or other agency of a
State (or political subdivision of a State)
or the United States by or against the
4

On March 8, 2017, the Court issued a minute order asking
the parties for supplemental briefing on whether 50 U.S.C. §
3936 applies. ECF No. 71.
21

servicemember or the servicemember’s heirs,
executors, administrators, or assigns.
Id.
The language of the statute is “unambiguous and
unequivocal.”
(2007).

Lowe v. United States, 79 Fed. Cl. 218, 224-25

The “express terms of the [SCRA] make certain that the

tolling of the statute of limitations is unconditional.”
Bickford v. United States, 656 F.2d 636, 639 (Ct. Cl. 1981); see
also Romualdo P. Eclavea, Tolling Provision of Soldiers’ and
Sailors’ Civil Relief Act (50 App. U.S.C.A. § 525), 36 A.L.R.
Fed. 420 (1978) (collecting case law from various jurisdictions
recognizing the mandatory nature of the Act’s tolling provision
and construing this provision liberally in accordance with the
Act’s remedial nature).
The only real issue triggering the SCRA’s tolling
provision is exactly what constitutes military service.
79 Fed. Cl. at 225.

Lowe,

Military service is defined as a “member of

the Army, Navy, Air Force, Marine Corps, or Coast Guard . . .
[in] active duty,” which, in turn, “means full-time duty in the
active military service of the United States.”
101(d)(1); 50 U.S.C. § 3911.

10 U.S.C. §

The term “period of military

service” means “the period beginning on the date on which a
servicemember enters military service and ending on the date on
which the servicemember is released from military service or

22

dies while in military service.”

50 U.S.C. § 3911.

In

addition, the SCRA’s tolling provision can be applied to members
of the armed services who spend their entire careers working for
the military.

Griffin v. Navient Sols., Inc., No. 15CV1818 DMS

(DHB), 2016 WL 5719831, at *4 (S.D. Cal. Sept. 30, 2016)
(holding that plaintiff was entitled to tolling during the
entirety of his active duty status in the U.S. Navy, even though
plaintiff was characterized as “career military”).

The parties

do not dispute that Plaintiff was on “Active Duty Status” in the
U.S. Army from November 3, 1995 until November 2015.

Therefore,

Plaintiff fits within the definition of the statute.
Defendants agree that the SCRA applies but argue, for
the first time in their supplemental memorandum, that laches
independently bars the claims.

The SCRA does not prevent laches

from barring a servicemember’s claims, as laches is a limitation
on stale claims entirely independent of any applicable statutes
of limitations.

Crews v. Prudential Ins. Co. of Am., Civ. No.

14-00009 ACK-RLP, 2015 WL 1646935, at *4 n. 4 (D. Haw. Apr. 13,
2015) (Kay, J.).
The “defenses of laches,” however, “may not be
asserted by a motion to dismiss, but should be set forth
affirmatively in defendant’s answer.”

Dirk Ter Haar v. Seaboard

Oil Co. of Delaware, 1 F.R.D. 598, 598 (S.D. Cal. 1940); see
also Lopez v. Fed. Nat. Mortg. Ass’n, No. CV 13-04782 MMM AGRX,
23

2013 WL 7098634, at *9 (C.D. Cal. Oct. 8, 2013) (“[A]ffirmative
defenses should be raised in responsive pleadings, not in preanswer motions brought under Rule 12(b).”)

“Under the Federal

Rules of Civil Procedure, a party, with limited exceptions, is
required to raise every defense in its first responsive
pleading, and defenses not so raised are deemed waived.”
Morrison v. Mahoney, 399 F.3d 1042, 1046 (9th Cir. 2005).
A defendant may raise an affirmative defense for the
first time in a motion for judgment on the pleadings “‘only if
the delay does not prejudice the plaintiff.’”

Owens v. Kaiser

Found. Health Plan, Inc., 244 F.3d 708, 713 (9th Cir. 2001)
(quoting Magana v. Com. of the N. Mariana Islands, 107 F.3d
1436, 1446 (9th Cir. 1997)).

The failure to raise a defense is

prejudicial if the party against whom the issue is raised may
have tried its case differently or advanced distinct legal
arguments against the issue.

Sram Corp. v. Shimano, Inc., 25 F.

App’x 626, 629 (9th Cir. 2002).
Defendants in their Answer assert certain affirmative
defenses and then incorporate all of the defenses listed in Rule
8, which include laches.
insufficient.

The Court finds that this is

See Mullaney v. Hilton Hotels Corp., 634 F. Supp.

2d 1130, 1160 (D. Haw. 2009) (Kay, J.) (holding that Defendant’s
assertion of “any and all defenses under Fed. R. Civ. P. 8(c) as
they may apply” was “not in keeping with notice requirements of
24

federal court pleadings” and was “not sufficient to properly
raise any specific affirmative defense”).

Because Plaintiff did

not have notice of this defense, the opportunity to respond, and
would likely have advanced distinct legal arguments against the
issue, the Court declines to exercise its discretion to consider
this issue.5

Therefore, the Court finds that the SCRA’s tolling

5

Even if the Court were to consider the equitable defense
of laches, it finds that laches would not apply here. For the
doctrine of laches to apply, two components must be present: (1)
unreasonable delay by the plaintiff in bringing his claim; and
(2) that delay must have resulted in prejudice to defendant.
Crews, 2015 WL 1646935, at *4–5.
“‘Delay is reasonable if the claim was brought without
undue delay after plaintiff knew of the wrong or knew of facts
and circumstances sufficient to impute such knowledge to him.’”
Id. at *5 (quoting Ass’n of Apartment Owners of Newton Meadows
v. Venture 15, Inc., 167 P.3d 225, 284 (Haw.2007) (quoting Adair
v. Hustace, 640 P.2d 294, 300 (Haw. 1982))). Plaintiff was
deployed to Iraq in December 2007 and returned in 2009.
Complaint ¶ 3. He was then stationed in South Carolina. Id.
Plaintiff was then deployed to Afghanistan in October 2013 and
returned in July 2014. Id. Plaintiff did not find out about
the foreclosure until 2015. Id. ¶ 33. Plaintiff filed his
Complaint in January 2016. Given Plaintiff’s military service
and assignment to duty stations away from Hawaii, the Court does
not find Plaintiff’s delay unreasonable under the doctrine of
laches. Cf. Crews, 2015 WL 1646935, at *6-7 (holding that
laches applied when Plaintiff was notified of his claim ten
years prior to filing suit and Plaintiff offered no explanation
for his delay).
In addition, Defendant was not prejudiced by this delay.
“‘Common but by no means exclusive examples of such prejudice
are loss of evidence with which to contest plaintiff’s claims,
including the fading memories or deaths of material witnesses,
changes in the value of the subject matter, changes in
defendant’s position, and intervening rights of third parties.’”
Id. at *5 (quoting Ass’n of Apartment Owners of Newton Meadows
v. Venture 15, Inc., 167 P.3d 225, 284 (Haw.2007) (quoting Adair
v. Hustace, 640 P.2d 294, 300 (Haw. 1982))). Plaintiff only
(continued . . . )
25

provision applies, and Plaintiff’s Count II claims are not time
barred.
b. Whether the SCRA Provides a Cognizable Basis for
Plaintiff’s UDAP Claim
Defendants argue that Plaintiff cannot state a UDAP
claim based on an alleged violation of the SCRA arising out his
military status at the time of the foreclosure because he was
not subject to the protections of the SCRA.

Plaintiff’s

complaint alleges only a violation of 50 U.S.C. § 3931,6 which is
titled “Protection of Servicemembers Against Default Judgments”
and “applies to any civil action or proceeding in which the
defendant does not make an appearance.”7

This section lists,

brought the suit approximately one year and a half after the
limitations period. It is unlikely that an evidentiary gap or
economic harm would grow much greater during that time.
Defendants argue that they were prejudiced by loss of evidence
because neither of them was actively involved in the
foreclosure. However, this is not prejudice arising from any
alleged delay from Plaintiff. In addition, Defendants argue
that because neither defendant played an active role in the
foreclosure, it would be inequitable for either to pay damages
for the prior servicers or its counsel’s actions. However, it
is likely that even if Plaintiff brought the claim within the
limitations period, Defendants would still be involved.
Therefore, this prejudice also did not arise from Plaintiff’s
alleged delay.
6
Plaintiff incorrectly cites this section of the statute in
his complaint as 50 U.S.C. § 521. To clarify, this provision
was formally cited as 50 App. U.S.C § 521 and is now 50 U.S.C. §
3931.
7
In his Opposition, Plaintiff states that all provisions in
SCRA apply to this lawsuit, while his complaint only cites one
statute. For the reasons discussed herein, the Court cannot
(continued . . . )
26

inter alia, requirements for affidavits in court filings,
appointing an attorney to represent defendant in military
service, and penalties for making or using a false affidavit.
Id.
On its face, this statute does not apply to the facts
alleged in Plaintiff’s complaint, which only mentions a nonjudicial foreclosure and contains no mention whatsoever of a
civil action or proceeding.8

The statute’s legislative history

also does not indicate that the statute was intended to cover
non-judicial foreclosures.

In fact, another section of the

SCRA, 50 U.S.C. § 3953, which is discussed herein, appears to
cover non-judicial foreclosures.
Although no other court has addressed the issue, the
Hawaii Supreme Court stated that non-judicial foreclosure is a
private enforcement remedy and not an action in law or suit in
equity.

See Mount v. Apao, 139 Haw. 167, 176, 384 P.3d 1268,

consider violations of statutes raised for the first time on the
instant motion.
Plaintiff also discusses and attaches a letter from Wells
Fargo regarding the SCRA. The Court cannot go beyond the face
of the pleadings on a Rule 12(c) motion and therefore declines
to consider this letter.
8
The Court notes that the Affidavit was filed in the Land
Court, State of Hawaii. However, the Affidavit was merely filed
in the Land Court for the purposes of recording the foreclosure
and not in a civil action or proceeding. Complaint, Exhibit E.
According to the parties, the Land Court refused to accept the
deed from U.S. Bank. At the Court’s hearing, Defendants
explained that the Land Court refused to accept the deed because
of an error in the bank’s full name.
27

1277 (2016) (discussing whether non-judicial foreclosure is a
“proceeding to enforce a mortgage” under a Hawaii State law).
The court further stated that a non-judicial foreclosure is a
“contractual self-help remedy and is not conducted under the
auspices of or supervised by any court or administrative
agency.”

Id.9

Although Plaintiff’s allegations in his

complaint—that the Affidavit falsely stated that Plaintiff was
not in the military—is admittedly substantiated by the
Affidavit’s attachment showing that Plaintiff was in fact in the
military; this does not change the fact that Plaintiff has not
alleged a cause of action based on the SCRA for this alleged
wrongdoing.10
Defendants, seemingly in an attempt to ascertain whether
Plaintiff could make any claim under the SCRA, discuss a more
applicable provision of the statute to this case—50 U.S.C. §
9

The cases Plaintiff cites—In re Templehoff, 339 B.R. 49
(Bankr. S.D.N.Y. 2005), Sprinkle v. SB&C Ltd., 472 F. Supp. 2d
1235 (W.D. Wash. 2006)—do not apply because they involve
affidavits filed in court and not related to a non-judicial
foreclosure. Plaintiff also cites In re Gibbs, 522 B.R. 282
(Bankr. D. Haw. 2014), which does not allege a violation under
the SCRA and therefore cannot apply here.
10
Furthermore, Plaintiff’s assertion in its Reply—that
Defendants have repeatedly recognized that this particular
matter is subject to the SCRA and that accordingly Plaintiff is
protected by the SCRA—is of no consequence.
The Court is concerned, however, that concluding that a
non-judicial foreclosure is not a “civil action or proceeding”
covered by the SCRA appears to undermine the purpose that
Congress intended to provide those who serve our country in the
military.
28

3953.

This section is entitled “Mortgages and Trust Deeds” and

“applies only to an obligation on real or personal property
owned by a servicemember that . . . originated before the period
of the servicemember’s military service and for which the
servicemember is still obligated . . . [and] is secured by a
mortgage, trust deed, or other security in the nature of a
mortgage.”

50 U.S.C. § 3953 (emphasis added).

This section

states, inter alia, that “[a] sale, foreclosure, or seizure of
property for a breach of an obligation

. . . shall not be valid

if made during one year after, the period of the
servicemembers’s military service . . .”

50 U.S.C. § 3953(c).

As Defendants point out, this section also would not
apply here because Plaintiff obtained the mortgage when he was
already in active service.

See Complaint ¶¶ 3, 11; see also

Williams v. U.S. Bank Nat. Assoc., No. ED CV12-00748-JLQ, 2013
WL 571844, at *5 (C.D. Cal. Feb. 13, 2013) (holding that
plaintiff failed to state a claim for relief based on Section
[3953] of the SCRA because plaintiff’s loan obligations
originated during her military service); Coward v. JP Morgan
Chase Bank, Nat. Ass’n, No. 2:11-CV-03378-GEB-DAD, 2012 WL
2263359, at *5 (E.D. Cal. June 15, 2012) (holding that the SCRA
only applies to contracts entered into before military service).
Starting on November 3, 1995, Plaintiff was on “Active Duty
Status” in the U.S. Army.

Complaint ¶¶ 3, 11.
29

Therefore, this

section does not apply to Plaintiff because he purchased the
Property in 2005 when he was in active duty.
Plaintiff also argues in his Opposition that 50 U.S.C.
§ 3912(b), as opposed to 50 U.S.C. § 3953, applies to determine
the scope of the SCRA.

The Court disagrees.

This section

states, “This chapter applies to any judicial or administrative
proceeding commenced in any court or agency in any jurisdiction
subject to this chapter.
criminal proceedings.”

This chapter does not apply to

50 U.S.C. § 3912(b).

This section is

listed within a subchapter titled “General Provisions” and comes
immediately after the “Definitions” section of the chapter.
This section merely describes when the SCRA applies more
generally, such as which courts have jurisdiction to enforce the
statute.

Because this provision regards the application of the

SCRA generally, the Court finds that this section does not apply
here.

Therefore, Plaintiff fails to plead a cognizable UDAP

claim based on 50 U.S.C. § 3931.
In his Opposition, Plaintiff claims that all sections of
the SCRA apply, even though his complaint only cites one
section.

The Court declines to consider whether every other

section of the SCRA applies.

See Schneider v. Calif. Dep’t of

Corrections, 151 F.3d 1194, 1197 n. 1 (9th Cir. 1998) (stating
that “new allegations contained in the [plaintiff’s] opposition
motion, however, are irrelevant for Rule 12(b)(6) purposes”
30

(internal quotation marks omitted)); Elizabeth Retail Props. LLC
v. KeyBank Nat. Ass’n, 83 F. Supp. 3d 972, 991 n.10 (D. Or.
2015) (declining to address a claim that was not pled in
Plaintiff’s complaint when deciding defendant’s motion to
dismiss); Allfrey v. Mabus, 770 F. Supp. 2d 1128, 1137 (W.D.
Wash. 2011) (“The Court need not address this claim since it was
not pled in Plaintiffs’ complaint.”); Boggs v. Wells Fargo Bank
NA, No. C 11-2346 SBA, 2011 WL 5038432, at *4 (N.D. Cal. Oct.
24, 2011) (“Since this claim is not pled in the Complaint, it is
not properly before the Court.”).

Therefore, Plaintiff has not

adequately pled a claim under the SCRA.
c. Whether Count II is Insufficiently Pled to the Extent
it is Based on the 2015 Communications or Any Other
Conduct
Defendants argue that to the extent Count II raises a
UDAP claim based on communications alleged to have occurred in
2015, the claim should be dismissed as insufficiently pled.
Defendants note that Count II of Plaintiff’s Complaint does not
discuss the 2015 communications whatsoever but lists sections of
Haw. Rev. Stat.—specifically sections 480D-1, et seq. and 443B1, et seq.—which govern collection practices and agencies.
Plaintiff argues in his Opposition that the 2015 communications
improperly conflicted with the affidavit stating that the loan
was satisfied and released and therefore created a UDAP

31

violation.11

Plaintiff cannot merely list statutes in his

Complaint without alleging specific facts to satisfy each
element of the identified statute.

Monreal v. GMAC Mortg., LLC,

948 F. Supp. 2d 1069, 1076 (S.D. Cal. 2013) (“[M]erely listing
statutes without articulating specific facts to satisfy each
element of the identified statute is insufficient.”).
In addition, the only way Plaintiff’s Count II claim
can be predicated on the 2015 communications is if
“incorporation by reference” of the allegations contained
elsewhere in the Complaint suffices to state a claim.

See

Complaint ¶ 57 (“Plaintiff reallges and incorporates paragraphs
1 through 56 of this Complaint.”).

However, courts have

generally rejected this practice, commonly known as shotgun or
puzzle pleading.

See, e.g., In re Intuitive Surgical Sec.

Litig., 65 F. Supp. 3d 821, 831 (N.D. Cal. 2014) (stating that
puzzle pleading—“a complaint that forces the defendants or court
to sort out the alleged statements and match them with the
corresponding adverse facts to solve the puzzle of interpreting
Plaintiff's claims”—abuses Rule 8’s principles); Schwartz v.
Bank of Am., N.A., No. CV 12-00525 KSC, 2013 WL 12132070, at *3
(D. Haw. Jan. 7, 2013) (“Plaintiff contends that she has

11

As previously discussed, the Court will not address new
allegations contained in Plaintiff’s Opposition but not in his
Complaint.
32

sufficiently stated a claim because she incorporates by
reference the factual allegations in the Complaint.

Such a

practice . . . is not permitted insofar as it violates FRCP 8’s
requirement of a short and plain statement and interferes with
the court’s ability to administer justice.” (internal quotation
marks omitted));

Dowkin v. Honolulu Police Dep’t, No. CIV. 10-

00087 SOM, 2012 WL 3012643, at *6 (D. Haw. July 23, 2012)
(stating that a claim must provide notice of “what wrongdoing is
being complained about” and must not “invite Defendants and the
court to match allegations to claims, as if a complaint is a
puzzle to be solved”).
This is particularly true where the claim alleges
deception, which requires a heightened pleading standard under
Rule 9(b).

See Fosbre v. Las Vegas Sands Corp., No. 2:10-CV-

00765-KJD, 2012 WL 2848057, at *3 (D. Nev. July 11, 2012)
(stating that the Rule 9(b) standard is not met by shotgun or
puzzle pleadings); S.E.C. v. Fraser, No. CV-09-00443-PHX-GMSC,
2009 WL 2450508, at *14 (D. Ariz. Aug. 11, 2009) (same); In re
Metro. Sec. Litig., 532 F.Supp.2d 1260, 1279 (E.D. Wash. 2007)
(same).

Even though Plaintiff incorporated all of the preceding

paragraphs by reference, he never set forth the factual basis
for his claim, a specific cause of action, or the elements of
such claim based on the 2015 communications.

33

Therefore, the

Court declines to consider a UDAP claim based on the 2015
communications because none has been adequately pled.12
In their Reply, Defendants also request that the Court
enter judgment in their favor on Count II because Plaintiff
fails to state a plausible UDAP claim.13

When considering a Rule

12(c) motion, “the court may dismiss an insufficiently pled
claim instead of granting judgment on it.”

Gagnon v. Nevada ex

rel. Dep’t of Pub. Safety, No. 2:13-CV-00528-JAD, 2015 WL
5062382, at *3 (D. Nev. Aug. 25, 2015); see Bobo v. City of
Stockton, No. 2:09-753 WBS KJN, 2010 WL 3448550, at *2 (E.D.
12

Defendants, seemingly in an attempt to determine what
section under Chapter 480 could apply if the Court were to
determine that such a claim had been pled, argue that even if
Plaintiff has alleged a claim based on the 2015 communications,
they cannot do so under Section 480 as a matter of law.
Defendants discuss Haw. Rev. Stat. § 480-13(b), which creates a
cause of action for violations of Haw. Rev. Stat. § 480-2, a
statute that Plaintiff cites in his complaint. Under § 48013(b), in addition to alleging the unfair and deceptive
practices, the Plaintiff must also allege injury and damage.
Defendants argue that Plaintiff has failed to adequately plead
injury or damages arising out of the 2015 letters. Plaintiff,
on the other hand, argues that he alleged damages in the
complaint. Because this Court holds that Plaintiff has not pled
a UDAP claim based on the 2015 communications, the Court
declines to discuss these arguments.
13
The Ninth Circuit has held that a “district court need
not consider arguments raised for the first time in a reply
brief.” Zamani v. Carnes, 491 F.3d 990, 997 (9th Cir. 2007);
see also Alaska Ctr. For Env’t v. U.S. Forest Serv., 189 F.3d
851, 858 n. 4 (9th Cir. 1999) (“Arguments not raised in opening
brief are waived.”). However, a court has discretion to decide
whether or not it will consider such arguments. Lane v. Dep’t
of Interior, 523 F.3d 1128, 1140 (9th Cir. 2008) (citing Glenn
K. Jackson, Inc. v. Roe, 273 F.3d 1192, 1201-02 (9th Cir.
2001)).
34

Cal. Sept. 1, 2010); Carmen v. San Francisco Unified Sch. Dist.,
982 F. Supp. 1396, 1401 (N.D. Cal. 1997).

Apart from the claim

relating to the 2005 mortgage transaction,14 the only allegations
remaining involve generalized assertions and listing statutes.15
Plaintiff does not allege a specific cause of action, discuss
elements of a claim, or connect the elements of a claim to facts
pled.

As previously discussed, this is inadequate, particularly

given the heightened pleading standards required under Rule
9(b).

The Court, therefore, grants Defendants’ motion without

prejudice.16
In sum, Plaintiff’s UDAP claim is not time-barred.
The Court, however, grants Defendants’ motion and dismisses
Count II of Plaintiff’s complaint without prejudice because it

14

Plaintiff’s UDAP claim regarding the 2005 mortgage
transaction alleged violations of Haw. Rev. Stat. §§ 480-2, 12,
whereas his claim regarding the 2010 Affidavit merely alleges a
violation of Haw. Rev. Stat. Chapter 480 generally.
15
Defendants argue that a higher pleading standard under
Rule 9(b) applies because Plaintiff asserts in his Motion for
Partial Summary Judgment that his UDAP claim only involves
deceptive conduct. To the extent the Complaint pleads deceptive
conduct, the Court finds that a heightened standard applies.
See Smallwood v. NCsoft Corp., 730 F. Supp. 2d 1213, 1232-33 (D.
Haw. 2010) (Kay, J.) (holding that claims for unfair and
deceptive practices under the Hawaii UDAP statute were subject
to the federal particularity requirements for pleading fraud).
16
In his Opposition, Plaintiff asks the Court to declare
that he owns his home free and clear without further obligation
of payment. Because Plaintiff has not moved for judgment on the
pleadings on this issue and the Court dismisses Plaintiff’s
Count II claim, the Court declines to decide this issue on the
instant motion.
35

was not adequately pled.
680-81 (2009).

See Ashcroft v. Iqbal, 556 U.S. 662,

Plaintiff is allowed leave to amend Count II of

his Complaint based on the deficiencies discussed herein.
II.

Plaintiff’s Motion for Partial Summary Judgment
In his Motion, Plaintiff argues that he is entitled to

summary judgment on all of his claims: (1) violation of the
FDCPA; (2) violation of UDAP statutes; (3) negligent
misrepresentation; and (4) negligence.

The Court discusses each

of these claims in turn.
a. FDCPA Claim
In order for the Court to grant summary judgment on
Plaintiff’s FDCPA claim, Plaintiff must show that there is no
genuine issue of material fact regarding each element of the
claim.

There are four elements of a FDCPA cause of action: (1)

the plaintiff is a “consumer” under 15 U.S.C. § 1692a(3); (2)
the debt arises out of a transaction entered into for personal
purposes; (3) the defendant is a “debt collector” under 15
U.S.C. § 1692a(6); and (4) the defendant violated one of the
provisions contained in 15 U.S.C. §§ 1692a–1692o.

See Minichino

v. Piilani Homeowners Ass’n, Civ. No. 16-00461 DKW-RLP, 2016 WL
5796799, at *4 (D. Haw. Sept. 30, 2016).

36

Neither party disputes

that Plaintiff is a consumer.17

The Court, therefore, must

address whether Plaintiff has established that there is no issue
of material fact for the remaining three elements of his FDCPA
claim.
i.

Whether Plaintiff Establishes that the Loan was a
Personal Debt

Under the FDCPA, “debt” includes “any obligation . . .
arising out of a transaction” where the subject of the
transaction is “primarily for personal, family, or household
purposes.”

15 U.S.C. § 1692a(5); see also Slenk v. Transworld

Sys., Inc., 236 F.3d 1072, 1075 (9th Cir. 2004) (stating that
the FDCPA applies to consumer debts and not business loans).
When classifying a loan, courts examine the transaction as a
whole and pay “particular attention to ‘the purpose for which
the credit was extended in order to determine whether [the]
transaction was primarily consumer or commercial in nature.’”
Slenk, 236 F.3d at 1075 (quoting Bloom v. I.C. System, Inc., 972
F.2d 1067, 1068 (9th Cir. 1992)).
Further, in making this determination, courts “have
elevated substance over form,” Slenk, 236 F.3d at 1275, and have
found that “[n]either the lender’s motives nor the fashion in
which the loan is memorialized are dispositive of this inquiry.”
17

Plaintiff is a “consumer” because he is a “natural person
obligated or allegedly obligated to pay any debt.” 15 U.S.C. §
1692a(3).
37

Bloom, 972 F.2d at 1068.

Therefore, courts “‘look to the

substance of the transaction and the borrower’s purpose in
obtaining the loan, rather than the form alone.’”

Slenk, 236

F.3d at 1275 (quoting Riviere, et al. v. Banner Chevrolet, Inc.,
184 F.3d 457, 462 (5th Cir. 1999)).

The relevant time period

for determining the nature of a loan under the FDCPA is when the
loan first arises, not when collection efforts begin.

Smith v.

Progressive Fin. Servs., Inc., No. 6:12-cv-1704-MC, 2013 WL
3995004, at *1 (D. Or. Aug. 1, 2013).

Subsequent use of the

money, property, insurance, or services which are the subject of
the transaction may be considered when evaluating the initial
purpose of a consumer.

Id. at *1 n.1.18

The FDCPA does not

18

Defendants mention that courts in this Circuit have
looked at several factors to determine whether the loan is used
primarily for commercial as opposed to personal purposes:
(1)

The relationship of the borrower’s primary
occupation to the acquisition. The more closely
related, the more likely it is to be business
purpose.

(2)

The degree to which the borrower will personally
manage the acquisition. The more personal
involvement there is, the more likely it is to be
business purpose.

(3)

The ratio of income from the acquisition to the
total income of the borrower. The higher the
ratio, the more likely it is to be business
purpose.

(4)

The size of the transaction.
38

The larger the
(continued . . . )

require the debt be incurred exclusively for personal, family,
or household purposes, but only primarily.

Rust v. Bittner &

Hahs, PC, No. CV-11-3057-LRS, 2012 WL 1358506, at *3 (E.D. Wash.
Apr. 19, 2012).
When examining the transaction as a whole, the Court
finds that Plaintiff’s loan primarily had a personal purpose and
was used primarily as a personal residence.

In Plaintiff’s

Declaration, he states that he “entered into the transaction . .
transaction, the more likely it is to be business
purpose.
(5)

The borrower’s statement of purpose for the loan.

Smith v. Progressive Fin. Servs., Inc., No. 6:12-cv-1704-MC,
2013 WL 3995004, at *2–3 (D. Or. Aug. 1, 2013); Thompson v.
Prof’l Foreclosure Corp., No. 98–CS–478, 2000 WL 34335866, at *4
(E.D. Wa. Sept. 25, 2005).
The Court notes that these factors originated in
Thorns v. Sundance Properties, 726 F.2d 1417, 1419 (9th Cir.
1984), which involved interpreting a similar provision in the
TILA. These factors were then discussed in an FDCPA case, Bloom
v. I.C. System, Inc., 972 F.2d 1067 (9th Cir. 1992), because, as
the Ninth Circuit acknowledged, few cases had interpreted the
term “debt” under the FDCPA. Id. at 1068. The Bloom court,
however, specifically left open the “question of whether the
standards governing what constitutes a consumer debt under the
FDCPA may differ from those determining what constitutes a
consumer loan under the TILA.” Id. at 1069 n.2.
Other courts in the Ninth Circuit have not mentioned
these specific factors when discussing whether a loan was used
for personal or business purposes under the FDCPA and look to
the totality of the circumstances. See, e.g., Otomo v. Nevada
Ass’n Servs., Inc., No. 2:10-CV-2199 JCM GWF, 2013 WL 1249598,
at *8 (D. Nev. Mar. 25, 2013); Rust v. Bittner & Hahs, PC, No.
CV-11-3057-LRS, 2012 WL 1358506, at *3 (E.D. Wash. Apr. 19,
2012). In addition, since the factors do not impact the Court’s
ultimate finding, the Court does not specifically examine them
here.
39

. for personal and household purposes; that is, to purchase my
home.”

Pl.’s CSF in Supp., Chung Decl. ¶ 5.

Plaintiff

testified that he wanted to buy property in Hawaii because he
thought about retiring here.
(Plaintiff’s Depo.) at 84.

See Defs.’ CSF in Opp’n, Ex. 3

Plaintiff also testified that at the

time he was negotiating to purchase the property, he intended to
live in the property and rent the remaining three to four other
bedrooms to tenants.
Depo.) at 89.

Defs.’ CSF in Opp’n, Ex. 3 (Plaintiff’s

When Plaintiff was deployed to Iraq, he rented

the property and had a property manager.
Ex. 3 (Plaintiff’s Depo.) at 112-13, 127.

Defs.’ CSF in Opp’n,
However, there is no

evidence that Plaintiff knew he would be deployed to Iraq when
he purchased the property.
Plaintiff argues in his Reply that even though he
rented his home, the court cannot construe this as a commercial
purpose because most consumers’ home is their largest investment
and Plaintiff planned to live in the home during retirement.

In

fact, Plaintiff lived in the Property for approximately two
years before he left Hawaii to serve in Iraq.
Opp’n, Ex. 3 (Plaintiff’s Depo.) at 111.

Defs.’ CSF in

Therefore, the Court

finds that the loan was personal.19

19

Although the parties have not presented and the Court is
unaware of a case with the precise facts at issue, the Court
finds that cases where courts have held that the debt was not
(continued . . . )
40

ii.

Whether Ocwen is a “Debt Collector”

A defendant to an FDCPA claim must be a “debt
collector” within the statute.
294 (1995).

Heintz v. Jackson, 514 U.S. 291,

Under 15 U.S.C. § 1692a(6), “debt collector” means:

any person who uses any instrumentality of
interstate commerce or the mails in any
business the principal purpose of which is
the collection of any debts, or who
regularly collects or attempts to collect,
directly or indirectly, debts owed or due or
asserted to be owed or due another . . . The
term does not include-. . . .
(F) any person collecting or attempting to
collect any debt owed or due or asserted to
be owed or due another to the extent such
activity (i) is incidental to a bona fide
fiduciary obligation or a bona fide escrow
arrangement; (ii) concerns a debt which was
originated by such person; (iii) concerns a
debt which was not in default at the time it
consumer in nature are clearly distinguishable. See, e.g.,
Kitamura v. AOAO of Lihue Townhouse, No. CIV. 12-00353 LEK, 2013
WL 1398058, at *5 (D. Haw. Mar. 29, 2013) (“[T]he evidence shows
that the property was not used primarily for personal, family,
or household purposes. Plaintiffs did not use the property as a
primary residence, but intended for the property’s rental income
to provide a source of funding for personal expenses.”); Johnson
v. Wells Fargo Home Mortg., Inc., No. 3:05–CV–0321–RAM, 2007 WL
3226153, at *9 (D. Nev. Oct. 29, 2007) (holding that loans that
were used to acquire residential investment properties to
collect rental payments were not a “debt” under the FDCPA
because Plaintiff did not use the properties “for his personal
residence or for any other personal, family or household
purpose” and “Plaintiff cites to no authority supporting the
proposition that obtaining rental properties, which he does not
occupy, but merely uses to collect rental payments, is still
consumer in nature because he uses the properties for retirement
planning”).
41

was obtained by such person; or (iv)
concerns a debt obtained by such person as a
secured party in a commercial credit
transaction involving the creditor.
In interpreting this definition, courts have
consistently held that the FDCPA does not apply to mortgage
servicing companies, or assignees of the mortgage debt, if the
debt was not in default at the time the debt was obtained.

See,

e.g., Perry v. Stewart Title Co., 756 F.2d 1197, 1208 (5th Cir.
1985) (“The legislative history of section 1692a(6) indicates
conclusively that a debt collector does not include the
consumer’s creditors, a mortgage servicing company, or an
assignee of a debt, as long as the debt was not in default at
the time it was assigned.”); Soriano v. Wells Fargo Bank, N.A.,
2012 WL 1536065, at *8 (D. Haw. Apr. 30, 2012) (“[The] Wells
Fargo Defendants are not ‘debt collectors’ under the FDCPA if
they were loan servicers that were servicing the loans before
they went into default and thereafter sought to collect the
debt.”); Fed. Nat’l Mortg. Ass’n v. Kamakau, 2012 WL 622169, at
*8 (D. Haw. Feb. 23, 2012) (stating that “original lenders,
creditors, mortgage servicing companies, and mortgage brokers
generally do not qualify as ‘debt collectors’ [under the
FDCPA]”).
An entity that did not originate the debt but acquired
it and attempts to collect it is “either a creditor or a debt

42

collector depending on the default status of the debt at the
time it was acquired.”

Perez v. Ocwen Loan Servicing, LLC,

2:15-cv-1708 MCE KJN PS, 2015 WL 9286554, at *2 (E.D. Cal. Dec.
21, 2015).

“The same is true of a loan servicer, which can

either stand in the shoes of a creditor or become a debt
collector, depending on whether the debt was assigned for
servicing before the default . . . occurred.”

Id.; see also

Justice v. Ocwen Loan Servicing, LLC, No. 2:13–CV–00165, 2014 WL
526143, at *4 (S.D. Ohio Feb. 7, 2014) (“In other words, if
Ocwen acquired the servicing for the Loans before they were in
default, then it is not a debt collector under the FDCPA.

But

if Ocwen acquired the servicing for the Loans after they were in
default, it is a debt collector under the FDCPA.”); Amini v.
Bank of Am. Corp., No. C11–0974RSL, 2013 WL 1898211, at *4 (W.D.
Wash. May 6, 2013) (a mortgage servicer is a “‘debt collector’
if the debt was in default when it took over the servicing
obligations,” even if the ownership of the loan remains with the
original lender).
When a defendant company acquires a debt through its
merger with another creditor or loan servicer, rather than
through a specific assignment, the debt is not considered to
have been acquired after the default and the subsequent creditor
or servicer is not deemed a “debt collector” under the FDCPA.
See Brown v. Morris, 243 F. App’x 31, 34-35 (5th Cir. 2007)
43

(“ABN AMRO . . . was not specifically assigned Brown’s mortgage
for debt-collection purposes.

Rather, ABN AMRO acquired it

through [a] merger . . . Accordingly, ABN AMRO did not ‘obtain’
[the] mortgage while it was in default and . . . therefore [was]
not an FDCPA debt collector.”); Esquivel v. Bank of Am., N.A.,
No. 2:12-CV-02502-GEB, 2013 WL 682925, at *2 (E.D. Cal. Feb. 21,
2013) (“[S]ince Bank of America, N.A. ‘obtained’ the debt when
its predecessor in interest, BAC Home Loans Servicing, LP,
obtained the debt, neither Defendant is a ‘debt collector’ under
the FDCPA.”); Fenello v. Bank of Am., N.A., 926 F. Supp. 2d
1342, 1350-51 (N.D. Ga. 2013) (holding that a loan servicer
defendant was not a debt collector under the FDCPA because it
acquired the right to service the loan through a merger with a
company who serviced the loan prior to default).20
Plaintiff states that Ocwen is a “debt collector”
under the FDCPA because: (1) Ocwen stated that the purpose of
its business, in part, is debt collection in its business
registration (Pl.’s CSF in Supp., Ex. N); (2) Ocwen said that it
was a debt collector in letters to Plaintiff (Pl.’s CSF in
Supp., Ex. G, H, I, L, M); and (3) Ocwen has filed numerous
20

“[C]ourts reason that in a merger . . . a successor
corporation stands in the shoes of the disappearing corporation
in every aspect and assumes all the debts and liabilities of the
disappearing corporation as if it incurred those liabilities
itself.” Beard v. Ocwen Loan Servicing, LLC, No. 1:14-CV-1162,
2015 WL 5707072, at *3 (M.D. Pa. Sept. 24, 2015).
44

collection actions in Hawaii.

Pl.’s CSF in Supp., Ex. Q.

Although these documents demonstrate that Ocwen was regularly
involved in debt collection activities, they do not address the
crucial issue here—whether the debt was in default at the time
it was obtained or whether Defendant Ocwen was a debt collector
with respect to the subject debt.21
To show factual support for this issue Plaintiff
discusses, inter alia, (1) a letter from HomeEq which states
that the loan was in default in March 2009 (Pl.’s CSF in Supp.,
Ex. C); (2) the mortgage assignment documents that assigned the
21

Plaintiff cites two cases where the court, in part, based
its decision on the fact that the company stated that it was a
debt collector—Reese v. Ellis, Painter, Ratteree & Adams, LLP,
678 F.3d 1211 (11th Cir. 2012) and Maynard v. Cannon, 401 F.
App’x. 389 (10th Cir. 2010).
Reese involved a motion to dismiss, where the court found
that plaintiff had sufficiently pled that defendant was a debt
collector because plaintiff alleged that defendant sent more
than 500 people letters saying that it was a debt collector.
678 F.3d at 1218. Although the letters Ocwen sent to Plaintiff
identify that it was a debt collector, the sufficiency of the
pleadings is not at issue here because this case is on a motion
for summary judgment.
In Maynard, the court held that defendant was a debt
collector because it admitted that it was a debt collector for
the purposes of the case in its answer to the complaint and
defendant testified in its deposition that the firm only works
on debt collections and foreclosures. 401 F. App’x. at 393.
Here, however, Ocwen never admitted in its Answer that it was a
debt collector under the FDCPA for the specific loan at issue in
this case, and Ocwen is not only a debt collector but also
involved in other services. See Pl.’s CSF in Supp., Ex. N.
Furthermore, neither case discusses whether a loan servicer who
obtains the serving rights through a merger post-default is a
debt collector, which is at issue here. Therefore, these cases
are inapposite.
45

mortgage to U.S. Bank in March 2010 (Pl.’s CSF in Supp., Ex. D);
and (3) a delinquency notice sent from Ocwen to Plaintiff
stating that the debt was in default on March 2, 2009.
CSF in Supp., Ex. G.

Pl.’s

These documents establish that HomeEq was

servicing the loan on the date of default and therefore Ocwen
obtained the debt after the default.

In fact, Defendants agree

that Ocwen started servicing the loan after the default.

See

Defs.’ CSF in Opp’n, Additional Material Facts at 11.
Therefore, Plaintiff has established that Ocwen is a debt
collector.
Defendants, however, argue that Ocwen acquired the
servicing rights to the debt through a de facto merger with
HomEq, the predecessor servicer, and therefore was not a
servicer to whom the servicing rights were assigned after
Plaintiff had already defaulted on the loan.

Although it is

undisputed that there was no legal merger between Ocwen and
HomEq, Defendants argue that because Ocwen acquired the debt
from HomEq through the purchase of HomEq’s assets from Barclays,
there was a de facto merger.
Under the de facto merger doctrine, even when a
transaction does not meet the statutory requirements for a
merger, courts may treat it as a statutory merger if it has the
economic effect of a statutory merger but is in the form of an
acquisition or sale of assets and liabilities.
46

Graphics Indus.,

Inc. v. Indep. Agent Ctr., Inc., 775 F.2d 38, 42 (2d Cir. 1985).
However, the parties have not found and the Court is unaware of
any case where the court addressed whether a de facto merger
could be treated as a legal merger in the FDCPA context, even
though it would appear that a de facto merger would be treated
the same as a legal merger under the FDCPA.
To demonstrate the alleged de facto merger, Defendants
proffer two pieces of evidence: (1) the Declaration of Kevin
Flannigan from Ocwen who stated that Ocwen entered an Asset
Purchase Agreement (“Agreement”) with two Barclays entities
(Defs.’ CSF in Opp’n, Flannigan Decl. ¶ 6-7); and (2) the
Agreement.

Defs.’ CSF in Opp’n, Ex. 1.22

The Court finds the

Flannigan Declaration insufficient to create an issue of fact
because it is conclusory.

See Beard v. Ocwen Loan Servicing,

LLC, No. 1:14-CV-1162, 2015 WL 5707072, at *4 (M.D. Pa. Sept.
24, 2015) (holding that Ocwen’s affidavit merely stating that
Ocwen acquired the loan through a merger between the prior
servicing agent’s parent company and Ocwen’s subsidiary was
insufficient to create a genuine issue of fact).
The Court also finds that the Agreement is
insufficient to meet Defendants’ burden.

22

The Agreement is among

Defendants filed a full version of the Agreement, upon
the Court’s instruction at the hearing. ECF No. 76. Plaintiff
then responded to the full document. ECF No. 78.
47

Barclays Bank PLC, Barclays Capital Real Estate Inc., and Ocwen
Loan Servicing, LLC, on the one hand, and Ocwen Financial
Service Corporation, on the other.
at 1.

Defs.’ CSF in Opp’n, Ex. 1

Defendants have not explained the mortgage’s chain of

title between these entities.

In addition, although at the

hearing Defendants stated that Barclays was “doing business as”
HomEq, the agreement does not mention HomEq whatsoever.
Furthermore, whether a transaction is a de facto
merger is typically a question of state law.

See IHFC

Properties, LLC v. APA Mktg., Inc., No. 1:10CV568, 2014 WL
197801, at *12 (M.D.N.C. Jan. 14, 2014); Planet Payment, Inc. v.
Nova Info. Sys., Inc., No. 07-CV-2520 CBA RML, 2011 WL 1636921,
at *6 (E.D.N.Y. Mar. 31, 2011).

The entities in the transaction

have different citizenships (England and Wales, Delaware, and
Florida), id. at 1, and the agreement is governed under New York
law.

Id. at 98.

Defendants have not discussed what

jurisdiction’s de facto merger rules apply, and therefore have
not met their burden to show that the characteristics for a de
facto merger have been met.
Finally, Ocwen did not assume all of HomEq’s assets
and liabilities under the Agreement.

Particularly, Section

2.02(b) lists those liabilities that the sellers retained under
the agreement, including liabilities arising from any breach of
default by the sellers or of any provision of any servicing
48

agreement.

Id. at 32-33.

Although Defendants have not properly

stated which state’s de facto merger rules apply, the Court
notes that assumption of assets and liabilities is a key factor
in determining the existence of a de facto merger.

See, e.g.,

Energy Intelligence Grp., Inc. v. Cowen & Co., LLC, No. 14 CIV.
3789 (NRB), 2016 WL 3939747, at *12 (S.D.N.Y. July 15, 2016)
(discussing Delaware law); Marenyi v. Packard Press Corp., No.
90 CIV. 4439 (CSH), 1994 WL 533275, at *3 (S.D.N.Y. Sept. 30,
1994) (discussing New York law).

Accordingly, the Court finds

that Defendants have not met their burden to show that Defendant
Ocwen stood in the shoes of the original mortgage service
company and finds summary judgment in favor of Plaintiff on this
issue.
iii. Whether Defendants Violated the FDCPA
Plaintiff moves for summary judgment on six different
violations of the FDCPA.

The Court discusses each of the

alleged violations in turn.
1.

Whether Defendants Violated the FDCPA When
they Demanded Different Amounts Owed on the
Same Date

Plaintiff asserts that Defendants violated 15 U.S.C. §
1692e(2)(A), which states:
A debt collector may not use any false,
deceptive, or misleading representation or
means in connection with the collection of
any debt. Without limiting the general
application of the foregoing, the following
49

conduct is a violation of this section . . .
(2) The false representation of--(A) the
character, amount, or legal status of any
debt.
A misstatement of a debt need not be knowing or intentional to
create liability under this section.

Clark v. Capital Credit &

Collection Servs., Inc., 460 F.3d 1162, 1176 (9th Cir. 2006).
To determine whether a debt collection practice is
false, deceptive, or misleading, it must be viewed objectively
from the perspective of the “least sophisticated debtor.”

See

Gonzales v. Arrow Fin. Servs., LLC, 660 F.3d 1055, 1062 (9th
Cir. 2011).

The least sophisticated debtor standard is “lower

than simply examining whether particular language would deceive
or mislead a reasonable debtor.”

Swanson v. Southern Oregon

Credit Serv. Inc., 869 F.2d 1222, 1227 (9th Cir. 1988).
However, the least sophisticated debtor standard retains the
concept of reasonableness so that a debt collector will not be
held liable for “‘bizarre or idiosyncratic interpretations of
debt collection notices.’”

Goray v. Unifund CCR Partners, et

al., Civ. No. 06-00214 HG/LEK, 2007 WL 4260017, at *6 (D. Haw.
Dec. 4, 2007) (quoting Clomon v. Jackson, 988 F.2d 1314, 1319-20
(2d Cir. 1993)).
Plaintiff states that Defendants made false
representations to Plaintiff by stating that differing amounts
were due on the same date.

A July 16, 2015 delinquency notice

50

letter from Ocwen to Plaintiff stated that the total amount due
on the loan was $220,903.86, see Pl.’s CSF in Supp., Ex. G,
whereas a mortgage account statement also dated July 16, 2015
says that the total amount due as of the same date is
$216,997.12.
by $3,906.74.

Pl.’s CSF in Supp., Ex. H.

These amounts differ

However, the delinquency notice also states in

bold and underlined font that the total amount includes the next
month’s regular monthly payment.

Pl.’s CSF in Supp., Ex. G.

In

addition, the notice states that the amount “may not include all
fees and charges, as all fees and charges may not have been
billed or posted to your account as of the letter date.

Please

contact us for your current reinstatement amount or payoff
amount.”

Id.
On the other hand, the mortgage account statement

states that the payment date is August 1, 2015 and that the
amount due on that date is $216,997.12.
H.

Pl.’s CSF in Supp., Ex.

The delinquency notice letter, therefore, includes an

additional month’s payment, and the amounts between the two
notices are seemingly supposed to be different.23

Because

Plaintiff has not shown that either of the amounts are false but
23

Contrary to Defendants’ argument, however, the Court
notes that the delinquency notice’s statement that the amount
may not include all fees and charges would actually increase the
amount due on the loan to be even higher than the amount listed
in the mortgage account statement and create a larger
discrepancy between the two amounts.
51

merely that they are different, and Defendants have discussed a
viable reason for the discrepancy, the Court recognizes that
Plaintiff’s theory that the account statements showing two
different amounts were misleading was not enough to meet his
burden on summary judgment.

However, the Court finds that these

documents would be misleading to the least sophisticated
consumer when contrasted with the Affidavit stating that the
loan was satisfied and thus violated the FDCPA as a matter of
law.
2. Whether Defendants’ Alleged “Gamesmanship” in
the Instant Litigation Violated the FDCPA
Plaintiff argues that Ocwen’s counterclaim based on
the alleged debt is misleading given (1) the Affidavit stating
that the loan was fully released (Pl.’s CSF in Supp., Ex. E.);
and (2) a response in Defendants’ Answer that they do not know
whether the debt remains outstanding.

ECF No. 33-2 at 4.

Plaintiff claims that these actions were violations of 15 U.S.C.
§ 1692e(2) and 15 U.S.C. § 1692g.

This allegation was not pled

in the Complaint, and Plaintiff has not sought leave to amend
his complaint.

The Complaint only alleges facts in the year

prior to the action’s filing and does not include any behavior
in the litigation itself.

Complaint ¶ 50.

52

In addition, the

allegations in the Complaint regarding the 15 U.S.C. § 1692g
violation only discuss a validation notice.24
The Court cannot address claims not pled in the
complaint on a summary judgment motion.

“Federal Rule of Civil

Procedure 8(a)(2) requires that the allegations in the complaint
‘give the defendant fair notice of what the plaintiff’s claim is
and the grounds upon which it rests.’”

Pickern v. Pier 1

Imports (U.S.), Inc., 457 F.3d 963, 968 (9th Cir. 2006) (quoting
Swierkiewicz v. Sorema N.A., 534 U.S. 506, 512 (2002)).
Consistent with this requirement, “raising such claim in a
summary judgment motion is insufficient to present the claim to
the district court.”

Navajo Nation v. United States Forest

Serv., 535 F.3d 1058, 1080 (9th Cir. 2008) (en banc).

“‘Simply

put, summary judgment is not a procedural second chance to flesh
out inadequate pleadings.’”

Wasco Prods., Inc. v. Southwall

Techs., Inc., 435 F.3d 989, 992 (9th Cir. 2006) (quoting Fleming
v. Lind–Waldock & Co., 922 F.2d 20, 24 (1st Cir. 1990)); see
also Hasan v. E. Washington State Univ., 485 F. App’x 169, 171
(9th Cir. 2012) (holding that a claim not pled in plaintiff’s

24

Plaintiff has not moved for summary judgment on a claim
related to a validation notice. (In his Complaint, Plaintiff
alleged that Ocwen failed to send Plaintiff a proper validation
notice. Under 15 U.S.C. § 1692g, Ocwen was required to
communicate certain information to Plaintiff within five days
after its initial communication with Plaintiff if its initial
communication did not contain the required information).
53

complaint should be rejected at the summary judgment stage);
Feezor v. Patterson, 896 F. Supp. 2d 895, 903 (E.D. Cal. 2012)
(“It is axiomatic that violations not pled in the complaint
cannot be considered by this court at the summary judgment
stage.”).

Therefore, Plaintiff cannot establish that summary

judgment is warranted on this violation.
3. Whether Defendants Violated the FDCPA for
Sending Plaintiff Letters After They Knew He
was Represented by an Attorney
Plaintiff asserts that Defendants violated 15 U.S.C. §
1692c(a)(2), which states:
Without the prior consent of the consumer
given directly to the debt collector or the
express permission of a court of competent
jurisdiction, a debt collector may not
communicate with a consumer in connection
with the collection of any debt . . . if the
debt collector knows the consumer is
represented by an attorney with respect to
such debt and has knowledge of, or can
readily ascertain, such attorney’s name and
address, unless the attorney fails to
respond within a reasonable period of time
to a communication from the debt collector
or unless the attorney consents to direct
communication with the consumer . . .
The term “communication” means the conveying of information
regarding a debt directly or indirectly to any person through
any medium.

15 U.S.C. § 1692a(2).

There is no bright line test

to determine whether a communication involves the collection of
a debt.

Preuher v. Seterus, LLC, No. 14 C 6140, 2014 WL

7005095, at *2 (N.D. Ill. Dec. 11, 2014).
54

Instead, courts look

to several factors, including: whether there was a demand for
payment, discussion of a deadline to pay, threats in the event
of nonpayment, mention of the underlying debt or a balance due
on the debt, and the purpose of the communications.

See, e.g.,

Burns v. Seterus, Inc., No. 16-CV-06638, 2017 WL 104735, at *1-3
(W.D.N.Y. Jan. 11, 2017); Alhassid v. Nationstar Mortg. LLC, No.
1:16-CV-21211-KMM, 2016 WL 4269867, at *1-2 (S.D. Fla. Aug. 10,
2016); Preuher, 2014 WL 7005095, at *2; Shelley v. Ocwen Loan
Servicing, LLC, No. 1:13-CV-506-RLY-DKL, 2013 WL 4584649, at *7
(S.D. Ind. Aug. 28, 2013).
Plaintiff states that Ocwen communicated directly with
Plaintiff after it knew that he was represented by an attorney.
Specifically, Plaintiff asserts an August 31, 2015 letter from
Plaintiff’s attorney to Ocwen notifying Ocwen of the
representation, which shows that Defendants had notice of the
representation.

Pl.’s CSF in Supp., Ex. J.

Plaintiff details

two letters from Ocwen directly to Plaintiff on September 10,
2015 and September 17, 2015.

Pl.’s CSF in Supp., Ex. L.

The

September 17, 2015 letter, an ombudsman acknowledgment, thanks
Plaintiff for his recent loan inquiry regarding his loan and
states that Ocwen is undergoing a review.
Ex. L at 1.

Pl.’s CSF in Supp.,

In the September 10, 2015 letter, Ocwen is seeking

information regarding hazard insurance on the Property and
notifying him that it plans to buy hazard insurance because
55

Plaintiff failed to purchase it as required under the mortgage
agreement.

Pl.’s CSF in Supp., Ex. L at 2.
The ombudsman acknowledgment letter is not a

prohibited communication under the FDCPA because it is not
seeking to collect a debt.
induce payment.

The purpose of the letter was not to

The letter does not even mention the status of

Plaintiff’s account.

Instead, it is merely informing Plaintiff

about the status of his inquiry.
prohibited under the FDCPA.

This communication is not

Cf. Shelley, 2013 WL 4584649, at *7

(holding that the letter was not a communication in connection
with debt collection under the FDCPA because “on its face it was
clearly informational—it alerts Plaintiffs that their account
has been transferred to Ocwen and provides Ocwen’s contact
information.

The Letter did not demand a specific payment or

discuss the delinquency of the underlying debt . . . [and] the
terms of the payment are not even listed.”).
The Court also finds that the hazard insurance letter
does not violate the FDCPA because it is not seeking to collect
a debt.

Courts have found that similar hazard insurance letters

do not constitute a communication in the connection with the
collection of a debt.

See, e.g., Burns, 2017 WL 104735, at *3;

Alhassid, 2016 WL 4269867, at *2; McCamis v. Servis One, Inc.,
No. 8:16-CV-1130-T-30AEP, 2016 WL 4063403, at *3 (M.D. Fla. July
29, 2016); Preuher, 2014 WL 7005095, at *3.
56

The letter does not

demand payment, discuss a deadline to pay, mention the
underlying debt, or discuss a balance due on the debt.

The

purpose of the letter was merely to inform Plaintiff that Ocwen
would be purchasing hazard insurance for Plaintiff because
Plaintiff had failed to provide hazard insurance as required
under the mortgage agreement.

Furthermore, under the Real

Estate Settlement Procedures Act (“RESPA”), Defendant was
required to provide notice before purchasing hazard insurance
and billing it to Plaintiff.

See 12 U.S.C. § § 2605(k)(1)(a),

(l)(1); 12 C.F.R. § 1024.37.
Plaintiff argues that the footer at the bottom of the
letters stating—“This communication is from a debt collector
attempting to collect a debt; any information obtained will be
used for that purpose”—demonstrates that these letters were
prohibited communications.

Pl.’s CSF in Supp., Ex. L at 1, 4.

However, this language alone is insufficient to make a
communication prohibited.

See LaCourse v. Ocwen Loan Servicing,

LLC, No. 14-CV-013-LM, 2015 WL 1565250, at *9-10 (D.N.H. Apr. 7,
2015) (holding that Ocwen’s letter to plaintiffs in response to
plaintiffs’ request for Ocwen to perform research regarding
their loan was not a prohibited communication even though it had
the notation, “This communication is from a debt collector
attempting to collect a debt; any information obtained will be

57

used for that purpose.”).

Therefore, the Court denies summary

judgment on this violation.
4. Whether Defendants Violated the FDCPA by
Improperly Charging Late Fees, Insurance
Charges, and Attorney’s Fees
Plaintiff claims that Defendants “improperly charged
late fees, insurance charges, and attorney’s fees, which were,
again, incorrect, confusing, and misleading” in violation of 15
U.S.C. § 1692e and 15 U.S.C. § 1692f.

However, Plaintiff

provides no analysis or supporting evidence for this claim in
his Motion and only raises two specific matters for the first
time in his Reply.

Accordingly, the Court will not consider the

same and denies Plaintiff’s motion to this extent.
5. Whether Defendants Violated the FDCPA by
Reporting False Credit Information
Plaintiff asserts that Ocwen violated 15 U.S.C. §
1692e(8), which prohibits “[c]ommunicating or threatening to
communicate to any person credit information which is known or
which should be known to be false . . .”

To support this

allegation, Plaintiff states that his account was reported to
the credit bureau in June 30, 2011 and August 31, 2015, both
showing a last payment on February 1, 2009 and showing an unpaid
balance of $415,601.00 with a monthly payment of $2,498.
CSF in Supp., Ex. R.

Pl.’s

Plaintiff also discusses the Affidavit

which says that the loan was satisfied.

58

Pl.’s CSF in Supp., Ex.

E.

Therefore, Ocwen knew or should have known that the

information reported to the credit bureaus was false.
Accordingly, the Court grants summary judgment in favor of
Plaintiff for this violation.
6. Whether Defendants Violated the FDCPA by
Attempting to Collect on the Alleged Debt,
Even Though They Knew it was Time-Barred
Plaintiff asserts that Defendants violated the FCDPA
by attempting to collect on the alleged debt, even though they
knew that the statute of limitations had run.25

Plaintiff

references Ocwen’s demands, which started in July 2015.
CSF in Supp., Ex. G.

Pl.’s

Federal courts disagree about whether a

debt collector can be liable under the FDCPA for sending a
collection letter to a consumer for a time-barred debt.

In the

Third and Eighth Circuits, a collection letter is only
actionable if it is accompanied by a threat of litigation.

See

Huertas v. Galaxy Asset Mgmt., 641 F.3d 28, 32-33 (3d Cir. 2011)
(“[T]he FDCPA permits a debt collector to

seek voluntary

repayment of the time-barred debt so long as the debt collector
does not initiate or threaten legal action in connection with
its debt collection efforts.”); Freyermuth v. Credit Bureau
Servs., Inc., 248 F.3d 767, 771 (8th Cir. 2001) (“[I]n the

25

At the hearing, both parties agreed that the debt was
subject to a six-year statute of limitations and therefore was
time-barred.
59

absence of a threat of litigation or actual litigation, no
violation of the FDCPA has occurred when a debt collector
attempts to collect on a potentially time-barred debt that is
otherwise valid.”).
In the Sixth and Seventh Circuits, however, a debt
collector may be liable if the collection letter would mislead
the least sophisticated debtor about the enforceability of the
debt.

See Buchanan v. Northland Group, Inc., 776 F.3d 393, 399-

400 (6th Cir. 2015) (holding that a settlement offer by a debt
collector with respect to a time-barred debt does by itself
amount to a threat of litigation and may violate the FDCPA);
McMahon v. LVNV Funding, LLC, 744 F.3d 1010, 1020 (7th Cir.
2014) (“The proposition that a debt collector violates the FDCPA
when it misleads an unsophisticated consumer to believe a timebarred debt is legally enforceable, regardless of whether
litigation is threatened, is straightforward under the
statute.”).26

The difference in the case law can, in part, be

explained by a factual difference between the cases; in Buchanan
and McMahon, the communication at issue offered to settle a
debt.

26

The Fifth Circuit has also agreed with the Sixth and
Seventh Circuits. See Daugherty v. Convergent Outsourcing,
Inc., 836 F.3d 507, 511 (5th Cir. 2016).
60

The Ninth Circuit has not addressed this issue.
However, two district court cases in the Ninth Circuit, both
decided prior to the Seventh Circuit decision of McMahon, have
required a threat of litigation for the letter seeking a timebarred debt to be actionable under the FDCPA.

See Abels v. JBC

Legal Grp., P.C., 428 F. Supp. 2d 1023, 1027-29 (N.D. Cal.
2005); Perretta v. Capital Acquisitions & Mgmt. Co., No. C-0205561 RMW, 2003 WL 21383757, at *4 (N.D. Cal. May 5, 2003).

One

recent case in the Ninth Circuit has followed McMahon, holding
that “the least sophisticated consumer could view an offer to
settle as a veiled threat of litigation, or, at the least, as a
misrepresentation that a debt is still enforceable.”

Finley v.

Dynamic Recovery Sols. LLC, No. 14-CV-04028-TEH, 2015 WL
3750140, at *4-5 (N.D. Cal. June 15, 2015).
The delinquency notice and mortgage account statements
do not discuss anything related to litigation or an “offer to
settle.”

However, given McMahon’s broad language regarding the

collection of any time-barred debt, the Court follows McMahon
and its progeny.

Because the communications attempted to

collect on a time-barred debt, they violated the FDCPA as a
matter of law.

The Court further finds that the collection

letter implicitly indicates to a least sophisticated consumer
that collection litigation would follow if the debt is not paid.

61

Accordingly, the Court grants summary judgment on this FDCPA
claim.
iv.

Whether the Bona Fide Error Defense Applies

The bona fide error defense is an affirmative defense
pursuant to 15 U.S.C. § 1692k(c) for which the debt collector
has the burden of proof.

Fox v. Citicorp Credit Servs., Inc.,

15 F.3d 1507, 1514 (9th Cir. 1994).

Defendants did not raise

the bona fide error defense in their Answer or First Amended
Answer to the Complaint and raise it for the first time in their
Opposition.

ECF Nos. 13, 37.

An affirmative defense raised for

the first time in opposition to summary judgment may be
considered unless the plaintiff argues prejudice from the late
assertion.

Paine v. City of Lompoc, 265 F.3d 975, 980 n.1 (9th

Cir. 2001).

Plaintiff states that he has been prejudiced by

this late assertion because he did not seek discovery on the
issue.

Plaintiff’s Reply at 7.

Therefore, the Court does not

address whether the bona fide error defense applies.
In sum, the Court grants Plaintiff’s motion for
partial summary judgment as to the following FDCPA violations:
(1) “claiming different amounts were owed on the same date” (the
court finds that Defendants violated 15 U.S.C. § 1692e(2)(A) by
sending Plaintiff collection letters despite the Affidavit
stating that the debt had been released); (5) reporting false
information to credit bureaus; and (6) attempting to collect on
62

a time-barred debt.

The Court denies Plaintiff’s motion for

partial summary judgment as to Plaintiff’s claims relating to
(2) Defendants’ “gamesmanship” in the instant litigation; (3)
communicating with Plaintiff when Defendants knew he was
represented by an attorney; and (4) improperly charging late
fees, insurance charges, and attorney’s fees.
b. UDAP Claim
In light of the Court’s decision that Plaintiff has
not stated a plausible UDAP claim, Plaintiff’s motion for
summary judgment on this claim is denied.
In Plaintiff’s motion for summary judgment, Plaintiff
asserts the following additional UDAP violations: (1)
foreclosing without notice; (2) disseminating false and
confusing credit information; (3) failing to properly respond to
a written request under the RESPA; and (4) representing in bad
faith that Defendants did not know that Plaintiff still owned
the property.27

None of these violations, however, were pled in

the Complaint.

As previously discussed, violations not pled in

the complaint cannot be decided on summary judgment.

27

Therefore,

Plaintiff asserts that Defendants violated the SCRA when
they misrepresented Plaintiff’s military status in the
Affidavit. Pl.’s CSF in Supp., Ex. E. As previously discussed,
based on the allegations in the Complaint, Plaintiff cannot
state a claim under the SCRA. The Court, therefore, declines
Plaintiff’s summary judgment motion on this claim.
63

because the Court cannot consider these claims, the Court denies
summary judgment as to these added claims.28

28

The Court notes the following with respect to Plaintiff’s
UDAP claim. To determine whether a practice is deceptive under
Haw. Rev. Stat. Chapter 480, courts look to whether it is: (1) a
representation, omission, or practice that (2) is likely to
mislead consumers acting reasonably under the circumstances
where (3) the representation, omission, or practice is material.
Courbat v. Dahana Ranch, Inc., 111 Haw. 254, 262, 141 P.3d 427,
435 (2006). “A representation, omission, or practice is
considered material if it involves information that is important
to consumers and, hence, likely to affect their choice of, or
conduct regarding, a product.” Id. (internal quotation marks
omitted). The test is objective, turning on whether the act or
omission is likely to mislead consumers. Id. In addition,
Plaintiff must demonstrate that the violation caused private
damage. Hungate v. Law Office of David B. Rosen, No. SCAP-130005234, 2017 WL 747870, at *14 (Haw. Feb. 27, 2017). However,
Haw. Rev. Stat. Chapter 480 precludes damages for personal
injury and emotional distress. See Zanakis-Pico v. Cutter
Dodge, Inc., 98 Haw. 309, 319, 47 P.3d 1222, 1232 (2002);
Ailetcher v. Beneficial Fin. Co. of Hawai‘i, 2 Haw. App. 301,
307, 632 P.2d 1071, 1076 (1981); Beerman v. Toro Mfg. Corp., 1
Haw. App. 111, 117, 615 P.2d 749, 754 (1980).
Plaintiff has put forward no evidence supporting that he
has incurred damages but merely presents conclusory statements.
These unsupported statements are insufficient to meet his burden
on summary judgment. See Hernandez v. Spacelabs Med. Inc., 343
F.3d 1107, 1112 (9th Cir. 2003) (“[A party] cannot defeat
summary judgment with allegations in the complaint, or with
unsupported conjecture or conclusory statements.”). Plaintiff
also does not make clear that the out of pocket damages that he
discusses were caused by the alleged violations.
In addition, a RESPA violation is not a per se UDAP
violation. See Au v. Republic State Mortg. Co., No. CIV. 1100251 JMS, 2012 WL 3113147, at *7 (D. Haw. July 31, 2012) (“[A]
viable § 480–2 cause of action does not necessarily follow from
violations of RESPA.”); Stanton v. Bank of Am., N.A., 2010 WL
4176375, at *12 (D. Haw. Oct. 9, 2010) (“[T]he fact that . . .
an action is contrary to RESPA . . . does not constitute a per
se unfair business practice because RESPA and HRS § 480–2 have
differing scope and application.”). Plaintiff also does not
(continued . . . )
64

c. Negligence and Negligent Misrepresentation Claims
At the hearing, Plaintiff said that he was no longer
pursuing the negligence and negligent misrepresentation claims
in his summary judgment motion.

The Court, therefore, does not

consider whether Plaintiff has met his burden on summary
judgment as to these claims.
CONCLUSION
For the foregoing reasons, the Court GRANTS
Defendants’ Motion for Judgment on the Pleadings on Count II of
the Complaint.

The Court DISMISSES Count II of the Complaint

WITHOUT PREJUDICE.

The Court GRANTS IN PART and DENIES IN PART

Plaintiff’s Motion for Partial Summary Judgment.
Specifically, the Court GRANTS summary judgment on
Plaintiff’s FDCPA claims related to: (1) “claiming different
amounts were owed on the same date” (the court finds that
Defendants violated 15 U.S.C. § 1692e(2)(A) by sending Plaintiff
collection letters despite the Affidavit stating that the debt
had been released); (5) reporting false information to credit
bureaus; and (6) attempting to collect on a time-barred debt.
The Court DENIES summary judgment on Plaintiff’s FDCPA
claim related to (2) Defendants’ “gamesmanship” in the instant
litigation; (3) communicating with Plaintiff when Defendants
demonstrate how the Defendants’ knowledge of the title problem
was a UDAP violation.

65

knew he was represented by an attorney; and (4) improperly
charging late fees, insurance charges, and attorney’s fees.29
The Court DENIES summary judgment on Plaintiff’s UDAP
claims.
IT IS SO ORDERED.
DATED:

Honolulu, Hawai’i, April 17, 2017.

________________________________
Alan C. Kay
Sr. United States District Judge

Chung v. U.S. Bank, N.A., Civ. No. 16-00017 ACK-RLP, Order Granting
Defendants’ Motion for Judgment on the Pleadings on Count II of the Complaint
and Granting in Part and Denying in Part Plaintiff’s Motion for Partial
Summary Judgment

29

The Court notes that it issued a minute order advising
the parties that the SCRA’s tolling statute (50 U.S.C. § 3936)
might be applicable with regard to Defendants’ Motion for
Judgment on the Pleadings on Count II. The Court further notes
that, as it found in its ruling, the tolling statute is
applicable to Plaintiff’s claims asserted in his Motion for
Partial Summary Judgment.
Should Defendants feel that they have not had an
opportunity to appropriately oppose Plaintiff’s Motion for
Partial Summary Judgment, given the Court’s ruling that the
SCRA’s tolling statute applies, Defendants may file a motion for
reconsideration with respect to that issue. Any such motion
should be filed within 14 days of the Court’s order. Plaintiff
may have seven days after such motion is filed to respond.
66