Matthews v. The Bank Of New York Mellon
ORDER GRANTING DEFENDANTS MOTION TO DISMISS FIRST AMENDED COMPLAINT [DKT. 26 ] re 34 Motion to Dismiss for Failure to State a Claim. Signed by JUDGE LESLIE E. KOBAYASHI on 06/30/2017. Defendant's Motion t o Dismiss First Amended Complaint [Dkt. 26 ], filed on January 21, 2017, is HEREBY GRANTED, and Plaintiffs' First Amended Complaint for Damages and Declaratory Relief, filed on December 27, 2016, is HEREBY DISMISSED WITH PREJUDICE. The Court DI RECTS the Clerk's Office to enter judgment and close this case on July 21, 2017, unless Plaintiffs file a motion for reconsideration of this Order by July 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). Participants not registered to receive electronic notifications served by first class mail on the date of this docket entry
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
RICHARD A. MATTHEWS, DONILEE
J. MATTHEWS, JENNETTE E.
MATTHEWS aka JENNETTE E.
THE BANK OF NEW YORK MELLON
FKA THE BANK OF NEW YORK AS
TRUSTEE FOR THE
CERTIFICATEHOLDERS OF THE
CWALT, INC., ALTERNATIVE LOAN )
TRUST 2007-OA7, MORTGAGE
CIVIL 16-00288 LEK-KSC
ORDER GRANTING DEFENDANT’S MOTION TO
DISMISS FIRST AMENDED COMPLAINT [DKT. 26]
On January 31, 2017, Defendant the Bank of New York
Mellon, formerly known as the Bank of New York as Trustee for the
Certificateholders of the CWALT, Inc., Alternative Loan Trust
2007-OA7, Mortgage Pass-through Certificates, Series 2007-OA7
(“Defendant” and “Defendant Trust”), filed a Motion to Dismiss
First Amended Complaint [Dkt. 26] (“Motion”).
[Dkt. no. 34.]
Pro se Plaintiffs Richard A. Matthews (“R. Matthews”), Donilee J.
Matthews (“D. Matthews”), and Jennette E. Matthews (“J.
Matthews,” all collectively “Plaintiffs”), filed a memorandum in
opposition on February 21, 2017, and Defendant filed its reply on
March 24, 2017.1
[Dkt. nos. 37, 40.]
The Court finds this
matter suitable for disposition without a hearing pursuant to
Rule LR7.2(d) of the Local Rules of Practice of the United States
District Court for the District of Hawai`i (“Local Rules”), and
the Motion is granted for the reasons set forth below.
The background of this matter is well known to the
parties, and the Court will only discuss the background relevant
to the Motion.
On October 27, 2016, the Court filed its order,
inter alia, granting Defendant’s motion to dismiss (“10/27/16
[Dkt. no. 24.]
The 10/27/16 Order dismissed all of the
claims in the Complaint for Damages and Declaratory Relief
(“Complaint”), [Notice of Removal, filed 6/3/16 (dkt. no. 1),
Exh. A (Complaint),] but allowed Plaintiffs to file an amended
complaint on all but one claim.
[10/27/16 Order at 18-19.]
December 27, 2016, Plaintiffs filed their First Amended Complaint
for Damages and Declaratory Relief (“Amended Complaint”).
The Amended Complaint brings claims against Defendant
for: breach of contract (“Count I”); [Amended Complaint at pg. 5,
¶¶ 1-50;] slander of title (“Count II”); [id. at ¶¶ 51-66;]
violation of Haw. Rev. Stat. chapter 480 (“Count III”); [id. at
The Motion states J. Matthews’s name as “Jennette E.
Alexander.” [Motion at 1.] The Court notes that no party has
moved to amend the case caption in the instant matter, and the
Court will therefore refer to the parties by the names used
¶¶ 67-72;] slander of credit (“Count IV”); [id. at ¶¶ 73-81;]
intentional infliction of emotional distress (“IIED” and
“Count V”); [id. at ¶¶ 82-85;] fraud (“Count VI”); [id. at ¶¶ 86124;] misrepresentation (“Count VII”); [id. at ¶¶ 125-30;] civil
conspiracy (“Count VIII”); [id. at ¶¶ 131-35;] and quiet title
(“Count IX”) [id. at ¶¶ 136-55].
all nine claims with prejudice.
The Motion seeks dismissal of
[Mem. in Supp. of Motion at 2.]
Plaintiffs are proceeding pro se, and the Court must
liberally construe their pleadings.
See, e.g., Eldridge v.
Block, 832 F.2d 1132, 1137 (9th Cir. 1987) (“The Supreme Court
has instructed the federal courts to liberally construe the
inartful pleading of pro se litigants.” (citation and internal
quotation marks omitted)).
Plaintiffs bring claims related to a
piece of property in Lahaina, Maui (“the Property”).
Complaint at ¶ 1.]
The 10/27/16 Order explained:
Plaintiffs assert that, when they purchased
the Property, [Axiom Mortgage Bankers Corp.
(“Axiom”)] acted as a mortgage broker but was not
licensed to do so, and therefore “Defendant and
its purported predecessor in interest are basing
the mortgage on an illegal and unenforceable
contract.” [Complaint at ¶¶ 13, 15-16.] Further,
Plaintiffs argue that, pursuant to Beneficial
Hawaii Inc. v. Kida, “‘loans made by an unlicensed
lender are completely unenforceable in judicial
foreclosure actions in Hawaii.’” [Mem. in Opp. to
Motion to Dismiss at 9 (quoting Kida, 96 Hawai`i
289, 30 P.3d 895 (2001)).]
First, Plaintiffs do not provide a pincite
for the quotation they use to support their
argument regarding the Mortgage, and, after a
thorough review of the Hawai`i Supreme Court’s
decision, the Court must conclude that this
quotation does not come from Kida. . . .
Plaintiffs correctly point out that, in Kida,
the Hawai`i Supreme Court held that the note and
mortgage were void and unenforceable. See Kida,
96 Hawai`i at 312, 30 P.3d at 918. However, Kida
is easily distinguishable from this case. In Bank
of America, N.A. v. Hill, the Hawai`i Intermediate
Court of Appeals explained:
In Kida, although a group known as
The Mortgage Warehouse was designated on
the loan documents as the “lender” while
another entity was the “broker”, The
Mortgage Warehouse actually acted as the
broker since it did not have any of its
own funds to lend, but arranged funding
from another entity and was compensated
for its services in an arrangement known
as “table funding”. [Kida, 96 Hawai`i]
at 306, 30 P.3d at 912. Unlike in Kida,
in the present case, there is no
evidence that MortgageIt was acting as a
. . . . Even accepting that
MortgageIt was not licensed as a broker,
and assuming that it made the subject
mortgage loan “for compensation or
gain”, we do not agree that it qualified
as a broker under [Haw. Rev. Stat.]
§ 454-1. The statute also defines a
mortgage broker as one who makes a loan
on behalf of the borrower. Kida held
that “we construe the phrase ‘on behalf
of the borrower,’ as set forth in [Haw.
Rev. Stat.] § 454-1, as amended, to mean
‘in the interest of a borrower’ or ‘for
the benefit of a borrower.’” Id. at
309, 30 P.3d at 915. However, a lender
does not automatically act on behalf of
a borrower when it lends money to the
borrower. McCarty v. GCP Mgmt., LLC,
Civil No. 10-00133 JMS/KSC, 2010 WL
4812763 at *4 (D. Haw. Nov. 17, 2010).
“Rather, it is well established that a
lender acts on its own behalf in an
arms-length loan transaction (even if a
borrower might in some sense ‘benefit’
from the loan transaction).” Id. Here,
the only evidence is that MortgageIt
acted as the lender; nothing indicates
that it attempted to find financing for
Hill from any other lender besides
itself. Absent evidence that MortgageIt
acted as Hill’s mortgage broker, the
note and mortgage are not void. See
Wilson v. Noel, No. CAAP-12-0000098,
2015 WL 2226273 at *2 (Haw. App. May 12,
2015) (“Because Wind River Brokers did
not broker Noel’s mortgage loan
transaction, their unlicensed status
does not affect the validity of Noel’s
note and mortgage.”); Fed Home Loan
Mort[g]. Corp v. Padron, No. CAAP-130001153, 2015 WL 405637 at *2 (Haw. App.
Jan. 29, 2015) (rejecting the argument
that a note and mortgage were void
where, although the lender,
SecurityNational, was not a licensed
mortgage broker, “SecurityNational was
acting on its behalf as a lender, not on
behalf of Padron as a broker.”).
No. CAAP-13-0000035, 2015 WL 6739087, at *8-9 (Ct.
App. Oct. 30, 2015) (emphasis in original)
(footnote omitted). Here, the Mortgage lists the
“Borrower” as the Trust and J. Matthews and the
“Lender” as Axiom. Plaintiffs argue that Axiom
worked for the interest or for the benefit of the
borrower Plaintiff. However, “nothing indicates
Plaintiffs assert that, on May 18, 2012, Axiom assigned
the mortgage to Defendant. [Amended Complaint at ¶ 5.] The
Mortgage is attached to the Amended Complaint as Exhibit 2. “A
court 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.” See
United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003) (some
citations omitted) (citing Van Buskirk v. CNN, 284 F.3d 977, 980
(9th Cir. 2002)).
that it attempted to find financing for
[Plaintiffs] from any other lender besides
itself.” See Hill, 2015 WL 6739087, at *9.
[10/27/16 Order at 10-15 (footnote, some citations, and some
internal quotation marks omitted).]
In the Amended Complaint, Plaintiffs base all of their
claims upon their belief that Axiom acted as an unlicensed
With regard to Count I, Plaintiffs state:
“Axiom acted for the benefit of the Plaintiffs, were not licensed
mortgage brokers at the time, and therefore the mortgage itself
was illegally obtained and void.”
of Count II.
[Amended Complaint at ¶ 11
Plaintiff alleges the same thing in support
See id. at ¶ 56.
Count III alleges that, “if the
Court does not issue an order ceasing and desisting the
Defendants from any further attempts to continue to unlawfully
bill amounts, and unlawfully enforce the void note and
mortgage . . . , then the Plaintiff will continue to suffer
[Id. at ¶ 72.]
Like Count III, Counts IV and
V allege that slander of title and IIED, respectively, resulted
from Defendant’s attempts to enforce a void note.
¶¶ 81, 85.
See id. at
Count VI challenges charges to Plaintiffs’ account
because “each of them were not entitled to enforce a void note;
was not permitted to impose false fees; [and] not entitled to put
false charges on the Plaintiffs[’] account.”
[Id. at ¶ 119.]
addition, Count VII states that Defendants committed
misrepresentation because it “made a statement or provided
information, in this case, the statement is that the Trustee
could sell the property based on a void mortgage and void note
that was originated by the lender/broker who was not licensed to
do business in this state.”
[Id. at ¶ 126(a).]
Plaintiffs allege that Defendant “conspired with each other and
on each other’s behalf,” by, inter alia, “originat[ing] and . . .
now enforcing a mortgage by an unlicensed lender.”3
Finally, Count IX states that Plaintiffs are entitled to
quiet title for the same reason that they said they are entitled
to relief on Counts I and II:
“Axiom acted for the benefit of
the Plaintiffs, were not licensed mortgage brokers at the time,
and therefore the mortgage itself was illegally obtained and
[Id. at ¶ 144 (emphasis omitted).]
First, the Court notes that Plaintiff cites the same
nonexistent Kida quotation.
See Amended Complaint at ¶¶ 12, 57,
Plaintiffs’ argument regarding Kida therefore fails as a
matter of law.
Further, to the extent that Plaintiffs argue
that, because Axiom provided them with a number of possible
lenders and “[t]he Axiom loan was ultimately chosen because the
terms were the most favorable,” [id. at ¶¶ 8-10,] their
argument is unavailing.
As the aforementioned quotation from
Plaintiffs state that “[d]efendants, and each of them,”
conspired, but only names Defendant. [Amended Complaint at
10/27/16 Order explains, in Kida the lender engaged in something
known as “table funding.”
The Amended Complaint, however, does
not allege that Axiom engaged in such a practice, nor that Axiom
was not able to fund the money for the Mortgage.
again failed to state a claim upon which relief can be granted,
and all of the claims in the Amended Complaint must therefore be
See Fed. R. Civ. P. 12(b)(6).
Finally, the 10/27/16 Order noted that, “if the amended
complaint fails to cure the defects identified in this Order, the
Court will dismiss this action with prejudice.”
Given the history of this action and Plaintiffs’
inability to cure the defects that the Court identified in the
Complaint, any further leave to amend would be futile.
Accordingly, the Court grants the Motion and dismisses the
Amended Complaint with prejudice.
See Lucas v. Dep’t of Corr.,
66 F.3d 245, 248 (9th Cir. 1995) (“Unless it is absolutely clear
that no amendment can cure the defect, however, a pro se litigant
is entitled to notice of the complaint’s deficiencies and an
opportunity to amend prior to dismissal of the action.”
Defendant raises a number of issues with the Amended
Complaint, including that R. Matthews and D. Matthews do not have
standing to pursue the claims against Defendant. See Mem. in
Support of Motion at 6-8. While many of these arguments have
merit, the Court does not need to address them because it has
dismissed the Amended Complaint on other grounds.
On the basis of the foregoing, Defendant’s Motion to
Dismiss First Amended Complaint [Dkt. 26], filed on January 21,
2017, is HEREBY GRANTED, and Plaintiffs’ First Amended Complaint
for Damages and Declaratory Relief, filed on December 27, 2016,
is HEREBY DISMISSED WITH PREJUDICE.
The Court DIRECTS the
Clerk’s Office to enter judgment and close this case on July 21,
2017, unless Plaintiffs file a motion for reconsideration of this
Order by July 17, 2017.
IT IS SO ORDERED.
DATED AT HONOLULU, HAWAII, June 30, 2017.
/s/ Leslie E. Kobayashi
Leslie E. Kobayashi
United States District Judge
RICHARD A. MATTHEWS, ET AL. VS. THE BANK OF NEW YORK MELLON,
ETC., ET AL; CIVIL 16-00288 LEK-KSC; ORDER GRANTING DEFENDANT’S
MOTION TO DISMISS FIRST AMENDED COMPLAINT
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