Horner v. First Hawaiian Bank et al

Filing 32

ORDER (1) DENYING PLAINTIFF'S 27 MOTION TO STRIKE AND (2) GRANTING DEFENDANTS' 15 18 MOTIONS TO DISMISS COMPLAINT. Signed by JUDGE DERRICK K. WATSON on 7/8/2016. (ecs, )CERTIFICATE OF SERVICEParticip ants registered to receive electronic notifications received this document electronically at the e-mail address listed on the Notice of Electronic Filing (NEF). Participants not registered to receive electronic notifications were served by first class mail on the date of this docket entry

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAI`I

MEL D. HORNER,
Plaintiff,
vs.
FIRST HAWAIIAN BANK;
MORTGAGE ELECTRONIC
REGISTRY SYSTEM;
MORTGAGE SERVICE CENTER;
BANK OF HAWAII; JONATHAN
W.Y. LAI; TRACEY L. KUBOTA;
DAVID NAKASHIMA; LAW
OFFICES OF WATANABE &
ING; JANE KWAN,
COMMISSIONER; GARY
KAWAMOTO, ASSISTANT VICE
PRESIDENT OF FIRST
HAWAIIAN BANK, STATE OF
HAWAII; in their individual and
official capacities,

CIVIL NO. 16-00122 DKW-KSC
ORDER (1) DENYING
PLAINTIFF’S MOTION TO
STRIKE AND (2) GRANTING
DEFENDANTS’ MOTIONS TO
DISMISS COMPLAINT

Defendants.

ORDER (1) DENYING PLAINTIFF’S MOTION TO STRIKE AND
(2) GRANTING DEFENDANTS’ MOTIONS TO DISMISS COMPLAINT
Mel Horner, proceeding pro se, asserts a variety of federal and state law
claims against the lenders and servicers of the mortgage on his home. He filed this
action after First Hawaiian Bank (FHB) successfully obtained a foreclosure

judgment against him and his property in state court. As set forth below, Horner’s
attempt to strike FHB’s Motion to Dismiss for professional conflict reasons lacks
merit. Further, because Horner fails to state a federal claim, the only potential
basis for this Court’s subject matter jurisdiction is lacking, resulting in the
dismissal of this action.
BACKGROUND1
On June 4, 2008, FHB made two loans to Horner in the principal amounts of
$344,000.00 and $64,500.00, respectively, both of which were secured by
mortgages on a home owned by Horner. FHB initiated a foreclosure action on
Horner’s home on September 19, 2011 in the Circuit Court of the First Circuit,
State of Hawaiʻi.2 Complaint ¶ 28; see also Dkt. No. 18-6 (Exh. B). On April 6,
2015, the state court entered its Foreclosure Order and Foreclosure Judgment,
establishing FHB’s entitlement to foreclose on the mortgages and ordering that the
home be sold. Dkt. Nos. 18-9 (Exh. E), 18-10 (Exh. F). Horner opposed the
foreclosure through various filings in both state and bankruptcy court. See Dkt.
Nos. 18-11 (Exh. G), 18-12 (Exh. H), 18-13 (Exh. I).

1

The following factual background is drawn from Horner’s Complaint, as well as other publicly
filed documents attached as exhibits to Defendants’ motions.
2
The Court takes judicial notice of this state court foreclosure action, First Hawaiian Bank v.
Horner et al., Civil No. 11-1-2149-09. See Mir v. Little Co. of Mary Hosp., 844 F.2d 646, 649
(9th Cir. 1988) (providing that a court may “take judicial notice of matters of public record
outside the pleadings and consider them for purposes of a motion to dismiss”) (internal quotation
marks and citation omitted). Defendant Bank of Hawaii is not a party to the foreclosure action.

2

Apparently in response to the foreclosure proceedings, Horner initiated this
action on March 17, 2016. Dkt. No. 1. He asserts the following federal claims:
violations of the Truth in Lending Act (First, Second and Third Causes of Action),
violation of the Servicemembers Civil Relief Act (Fourth Cause of Action), and
violations of the Fair Debt Collection Practices Act (no cause of action explicitly
enumerated). In addition, Horner generally asserts fraud claims under Hawaiʻi
state law.
Defendants FHB and the Bank of Hawaii (BOH) both moved to dismiss the
Complaint. Rather than filing a timely opposition, Horner filed a Motion to Strike
FHB’s Motion to Dismiss after the opposition deadline had passed. Dkt. No. 27.
Horner also filed an untimely opposition to BOH’s Motion to Dismiss. Dkt. No.
26. The Court heard oral argument on all three motions on June 3, 2016. Dkt. No.
31.
STANDARD OF REVIEW
Federal Rule of Civil Procedure 12(b)(6) permits a motion to dismiss for
failure to state a claim upon which relief can be granted. Pursuant to Ashcroft v.
Iqbal, “[t]o survive a motion to dismiss, a complaint must contain sufficient factual
matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’”
556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 554,
570 (2007)). “[T]he tenet that a court must accept as true all of the allegations
3

contained in a complaint is inapplicable to legal conclusions.” Id. Accordingly,
“[t]hreadbare recitals of the elements of a cause of action, supported by mere
conclusory statements, do not suffice.” Id. (citing Twombly, 550 U.S. at 555).
Under Rule 12(b)(6), review is generally limited to the contents of the
complaint. Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001);
Campanelli v. Bockrath, 100 F.3d 1476, 1479 (9th Cir. 1996). However, courts
may “consider certain materials—documents attached to the complaint, documents
incorporated by reference in the complaint, or matters of judicial notice—without
converting the motion to dismiss into a motion for summary judgment.” United
States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003).
DISCUSSION
I.

Horner’s Motion to Strike
The Court first addresses Horner’s contention that FHB’s Motion to Dismiss

should be struck on the basis of alleged violations of Hawaii Rules of Professional
Conduct 1.7 and 3.7. As FHB points out, Horner filed his Motion to Strike after he
had missed the deadline to file his opposition to FHB’s Motion to Dismiss. The
Court is cognizant that the purpose of the “[Hawaii Rules of Professional Conduct]
can be subverted when they are invoked by opposing parties as procedural
weapons.” Haw. R. Prof’l Conduct, Scope at ¶ 7. In any event, Horner’s
arguments in favor of striking FHB’s Motion to Dismiss lack merit.
4

Rule 1.7 relates to conflicts of interest and generally prohibits representation
of a client if there is a concurrent conflict of interest, which exists if “(1) the
representation of one client will be directly adverse to another client; or (2) there is
a significant risk that the representation of one or more clients will be materially
limited by the lawyer’s responsibilities to another client, a former client, or a third
person, or by a personal interest of the lawyer.” Haw. R. Prof’l Conduct Rule
1.7(a)(1) & (2). Notably, the rule contains the following exception:
(b) Notwithstanding the existence of a concurrent conflict of
interest under paragraph (a), a lawyer may represent a client if:
(1) the lawyer reasonably believes that the lawyer will
be able to provide competent and diligent representation
to each affected client;
(2) the representation is not prohibited by law;
(3) the representation does not involve the assertion of a
claim by one client against another client represented by
the lawyer in the same litigation or other proceeding
before a tribunal; and
(4) each affected client gives consent after consultation,
confirmed in writing.
Id. at 1.7(b).
Rule 1.7 does not apply for two reasons. First, there is no existing or
apparent conflict of interest here. The Defendants have not asserted any crossclaims against one another, nor does it appear likely that their interests might
diverge based on the claims asserted. Second, even if a conflict of interest existed,
5

FHB’s counsel would still be able to represent the several defendants they
currently represent because the requirements set forth in Rule 1.7(b) have been
satisfied. See Declaration of Jonathan Lai, Dkt. No 29-1 at 1-2.
Rule 3.7 relates to the general prohibition against a lawyer acting as an
advocate at a trial in which the lawyer is likely to be a necessary witness. As the
Court explained at the hearing, it is premature at this time to determine whether the
lawyers in the instant case are likely to be called as necessary witnesses at trial.
Simply invoking that possibility is plainly insufficient, else an opposing party
could routinely disqualify adverse counsel whenever it suited. Rule 3.7, therefore,
also does not provide a basis to strike FHB’s Motion to Dismiss.
II.

Bank of Hawaii’s Motion to Dismiss
BOH’s place at the defense table is a bit of a mystery. At oral argument,

Horner clarified that BOH is a named defendant solely because BOH is the actual
holder of the mortgages that FHB sought to foreclose in the state court action. In
entering the Foreclosure Order and Judgment in favor of FHB, however, the state
court found otherwise. See Dkt. No. 18-9 (Exh. E, FOF Nos. 6-7, 15-16, 19-20,
29-30). Horner, in other words, asks this Court to revisit, and to ultimately disturb,
a material factual finding made by the state court. The Court is unwilling to do so
because of Rooker-Feldman. The Rooker-Feldman doctrine provides that:
a losing party in state court is barred from seeking what in
substance would be appellate review of the state judgment in a
6

United States District Court, based on the losing party's claim
that the state judgment itself violates the loser’s federal rights.
Bennett v. Yoshina, 140 F.3d 1218, 1223 (9th Cir. 1998) (quoting Johnson v.
DeGrandy, 512 U.S. 997, 1005-06 (1994)). In short, Rooker-Feldman prohibits
federal courts from directly reviewing state court judgments even when a federal
question is presented. See id.
Because Horner seeks to assert claims against BOH based solely on
allegations that BOH may be the holder of the relevant mortgages, those claims are
barred by the Rooker-Feldman doctrine. The state court’s determination that FHB
is indeed the rightful owner and holder of the mortgages cannot be appealed to this
Court. As this Court explained at the hearing, any such challenge must be made in
the state court proceedings and/or appealed through the state-court appellate
system. Accordingly, the Court GRANTS BOH’s Motion to Dismiss.
II.

First Hawaiian Bank’s Motion to Dismiss
A.

Federal Claims

Horner’s federal claims against FHB all fail as a matter of law.
1.

TILA Claims

In Counts 1 through 3, Horner alleges that FHB violated 15 U.S.C. §§
1641(f)(2) and 1639(1)(2) by failing to provide: (1) the full name, address or phone
number of the owner of the obligation; and (2) an accurate payoff statement within
a reasonable time after receiving two separate requests. See Complaint ¶¶ 32-57.
7

Horner seeks damages under 15 U.S.C. §§ 1640(a)(2) and 1640(a)(3). Id. ¶¶ 45,
57.
Horner’s TILA claims fail to state a claim because they are barred by the
statute of limitations. Damages (both statutory and actual damages) are
recoverable under TILA for violations of its disclosure requirements. 15 U.S.C. §
1640(a). However, section 1640(e) imposes a one-year statute of limitations on
claims for damages. That one-year period typically runs from the date of
consummation of the transaction . King v. State of California, 784 F.2d 910, 913
(9th Cir. 1986).
In the instant case, Horner executed the relevant loan documents on or about
June 4, 2008. Horner did not file the subject Complaint until March 17, 2016.
Because Horner filed his action almost eight years after the consummation of the
loans at issue, and he failed to cite any circumstances that would justify equitable
tolling,3 any claim for damages under TILA is barred by the one-year statute of
limitations.4 Accordingly, Counts 1-3 are dismissed with prejudice.

3

At the hearing, the Court asked Horner whether there were any circumstances that would
equitably toll the statute of limitations period, but Horner was unable to provide the Court with
any allegations that would support a claim for equitable tolling. Accordingly, granting leave to
amend these TILA claims would be futile.
4
FHB also points out, and the Court agrees, that a claim for rescission under TILA would also be
time-barred by the three-year statute of limitations. See 15 U.S.C. § 1636(f).

8

2.

SCRA Claim

In Count 4, Horner claims that FHB has failed to or refused to comply with
50 U.S.C. § 533 of the Servicemembers Civil Relief Act (“SCRA”) by failing to
consider Horner’s military status in relation to his loan modification requests
pursuant to the Home Affordable Refinance Program (“HARP”) . Complaint ¶¶
58-60. This claim must be dismissed because the Servicemembers Civil Relief Act
(“SCRA”) does not provide a cause of action for the relief that Horner seeks.
The purpose of the SCRA is “to enable [servicemembers] to devote their
entire energy to the defense needs of the Nation.” 50 U.S.C. app. § 502(1). “It
accomplishes this purpose by imposing limitations on judicial proceedings that
could take place while a member of the armed forces is on active duty, including
insurance, taxation, loans, contract enforcement, and other civil actions.” Brewster
v. Sun Trust Mortg. Inc., 742 F.3d 876, 878 (9th Cir. 2014). As FHB points out,
there is nothing in the SCRA that “even hints that there are specific SCRA
requirements that lenders must satisfy when considering loan modification
requests” from soldiers no longer on deployment status Dkt. No. 18-3 at 18. The
only argument that Horner provided at the hearing was that after returning from
Iraq in 2009, his application for a loan modification was denied. The Court agrees
with FHB that it cannot be in violation of the SCRA if FHB has not taken action

9

that is actually proscribed by the SCRA. Accordingly, Count 4 is dismissed with
prejudice.
3.

FDCPA Claim

Finally, to the extent the Complaint alleges a claim under the Fair Debt
Collection Practices Act (“FDCPA”), that claim similarly fails as a matter of law.5
As a preliminary matter, it is unclear whether any of the named Defendants in the
instant case even qualify as debt collectors under the FDCPA. Even if one did,
however, FDCPA claims are subject to a one-year statute of limitations. See Lyons
v. Michael & Assoc., --- F.3d ---, 2016 WL 3192623, at *2 (9th Cir. June 8, 2016)
(“A claim under the FDCPA must be brought ‘within one year from the date on
which the violation occurs.’” (quoting 15 U.S.C. § 1692k(d))).
Here, Horner generally alleges that “Defendants violated the [F]air Debt
Collection Practices Act when it tried to collect payment on the obligation of a
Promissory Note against the Plaintiff when the note was not in possession of the
Defendants Bank[.]” Dkt. No. 1 at 2. Though the allegation is vague, it is clear
that any FDCPA claim would arise out of events preceding the state court
foreclosure action. See Complaint ¶ 28 (“On or about September of 2011,
Defendant FHB by and through its Counsel of Record (Defense Counsel),

5

Although the Complaint’s caption contains a reference to 15 U.S.C. §§ 1692(e)-(g) of the Fair
Debt Collections Practices Act, the body of the Complaint does not clearly articulate an FDCPA
claim.

10

knowingly, intentionally and willfully, filed a FRAUDULENT BASED Complaint
in the Circuit Court, State of Hawaii, seeking to Foreclose on Plaintiff’s Real
Property, for failure to make regular payments on the Loan.”). The state court
foreclosure action was initiated on September 19, 2011, and thus, the FDCPA
accrued at the latest on this date. Because Horner did not initiate the instant action
until March 17, 2016, an FDCPA claim arising out of the facts that led to the
foreclosure action is time-barred and must be dismissed with prejudice.
B.

State Law Claims

Having dismissed the only federal claims that could support federal subject
matter jurisdiction, this court may decline to exercise supplemental jurisdiction
over the remaining state law claims in the complaint. 28 U.S.C. § 1367(c). “[A]
federal court should consider and weigh in each case, and at every stage of the
litigation, the values of judicial economy, convenience, fairness, and comity in
order to decide whether to exercise jurisdiction over a case brought in that court
involving pendent state-law claims.” Carnegie–Mellon University v. Cohill, 484
U.S. 343, 350 (1988). “[I]f the federal claims are dismissed before trial, even
though not insubstantial in a jurisdictional sense, the state claims should be
dismissed as well.” United Mine Workers of Am. v. Gibbs, 383 U.S. 715, 726
(1966). The Supreme Court has clarified that this does not require mandatory
dismissal when federal claims are dismissed, but “in the usual case in which all
11

federal-law claims are eliminated before trial, the balance of factors to be
considered under the pendent jurisdiction doctrine—judicial economy,
convenience, fairness, and comity—will point toward declining to exercise
jurisdiction over the remaining state-law claims.” Carnegie–Mellon, 484 U.S. at
350 n. 7.
After careful consideration, the Court concludes that the factors of judicial
economy, convenience, fairness, and comity balance in favor of declining
supplemental jurisdiction over Horner’s remaining state-law claims, particularly
given the early stage of this litigation. Accordingly, those claims are also
dismissed.
CONCLUSION
The Court DENIES Horner’s Motion to Strike (Dkt. No. 27) and GRANTS
Defendants’ Motions to Dismiss (Dkt. Nos. 15, 18). The Clerk of Court is directed
to close the case.
IT IS SO ORDERED.
DATED: July 8, 2016 at Honolulu, Hawai‘i.

Horner v. First Hawaiian Bank, et al.; CV 16-00122 DKW-KSC; ORDER (1) DENYING PLAINTIFF’S
MOTION TO STRIKE AND (2) GRANTING DEFENDANTS’ MOTIONS TO DISMISS COMPLAINT

12