Agbannaoag v. Ocwen Loan Servicing, LLC

Filing 19

ORDER GRANTING DEFENDANTS OCWEN LOAN SERVICING, LLC AND DEUTSCHE BANK NATIONAL TRUST COMPANY'S REQUEST FOR THE COURT TO TAKE JUDICIAL NOTICE (ECF No. 8-2) and GRANTING DEFENDANTS OCWEN LOAN SERVICING, LLC AND DEUTSCHE BANK NATIONAL TRUST COMPAN Y'S MOTION TO DISMISS (ECF No. 8 ) re 18 - Signed by JUDGE HELEN GILLMOR on 10/25/2016. "Defendant Ocwen Loan Servicing, LLC and Defendant Deutsche Bank National Trust Company's Request for Judicial Not ice (ECF No. 8-2) is GRANTED. Defendant Ocwen Loan Servicing, LLC and Defendant Deutsche Bank National Trust Company's Motion to Dismiss (ECF No. 8) is GRANTED WITH LEAVE TO FILE A MOTION TO AMEND. Plaintiffs' ; claims are dismissed as follows: (Count I) Plaintiffs' Claim for Breach of Implied Covenant of Good Faith and Fair Dealing is DISMISSED WITH PREJUDICE; (Count II) Plaintiffs' Claim for Tortious Breach of Implied Co venant of Good Faith and Fair Dealing is DISMISSED WITH PREJUDICE; (Count III) Plaintiffs' Claim for Unfair and Deceptive Trade Practices is DISMISSED WITH LEAVE TO FILE A MOTION TO AMEND; (Count IV) Plaintiffs' Cl aim for Tortious Interference with Business Relations is DISMISSED WITH LEAVE TO FILE A MOTION TO AMEND; and, (Count V) Plaintiffs' Claim pursuant to the Fair Debt Collection Practices Act is DISMISSED WITH LEAVE TO FILE A MOTI ON TO AMEND. Plaintiffs may file a Motion for Leave to File an Amended Complaint before the Magistrate Judge on or before Wednesday, November 30, 2016. The Proposed Amended Complaint must conform to the rulings contained in this Order. < BR> Failure to file a Motion for Leave to File an Amended Complaint on or before Wednesday, November 30, 2016, will result in automatic dismissal of this action." (emt, )CERTIFICATE OF SERVICEPart icipants 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 HAWAII
Civ. No. 16-00394 HG-RLP

MERLITA AGBANNAOAG; JERRY
AGBANNAOAG,

)
)
)
Plaintiffs,
)
)
)
vs.
)
)
OCWEN LOAN SERVICING, LLC;
DEUTSCHE BANK NATIONAL TRUST
)
COMPANY; JOHN DOES 1-10; JANE )
DOES 1-10; DOE PARTNERSHIPS 1- )
10; DOE CORPORATIONS 1-10; DOE )
)
ENTITIES 1-10; and DOE
)
GOVERNMENTAL UNITS 1-10,
)
)
Defendants.
)

ORDER GRANTING DEFENDANTS OCWEN LOAN SERVICING, LLC AND DEUTSCHE
BANK NATIONAL TRUST COMPANY’S REQUEST FOR THE COURT TO TAKE
JUDICIAL NOTICE (ECF No. 8-2)
and
GRANTING DEFENDANTS OCWEN LOAN SERVICING, LLC AND DEUTSCHE BANK
NATIONAL TRUST COMPANY’S MOTION TO DISMISS (ECF No. 8)
Plaintiffs Merlita Agbannaoag and Jerry Agbannaoag have
filed a Complaint against Ocwen Loan Servicing, LLC and Deutsche
Bank National Trust Company.
Plaintiffs claim that they executed an Adjustable Rate Note
in favor of AmeriFund Financial, Inc. to obtain a Loan to
purchase real property on the island of Maui.

The Loan was

secured by a Mortgage, which was recorded against the real

1

property.

Plaintiffs claim that the Note and Mortgage were

assigned to Defendant Deutsche Bank National Trust Company1 and
that Defendant Ocwen Loan Servicing, LLC is the servicer.
Plaintiffs’ Complaint alleges claims against both
Defendants.
Count I is alleged against both Defendants for breach of
implied covenant of good faith and fair dealing.
Count II is missing from the Complaint.
paragraphs 68-74.

The Complaint skips

The Prayer for Relief in Plaintiffs’ Complaint

states that Count II is alleged against both Defendants for
tortious breach of good faith and fair dealing.
Count III is alleged against both Defendants for unfair and
deceptive acts or practices.
No additional Counts are alleged in the Complaint.
Complaint skips paragraphs 88-99.

The

The Prayer for Relief in

Plaintiffs’ Complaint states that Count IV is alleged against
both Defendants for tortious interference with a business
relationship and that Count V is for violations of the Fair Debt
Collection Practices Act.

1

The proper title of Defendant is Defendant Deutsche Bank
National Trust Company as Trustee of the Indymac INDX Mortgage
Loan Trust 2005-AR6, Mortgage Pass-Through Certificates, Series
2005-AR6 Under the Pooling and Servicing Agreement dated March 1,
2005, as set forth in the Assignment of Mortgage attached as Ex.
B to Defendants’ Request for Judicial Notice at p. 44, ECF No. 84.
2

Defendants filed a Motion to Dismiss all claims pursuant to
Federal Rule of Civil Procedure 8, 9, and 12(b)(6).
Defendants have also filed a Request for the Court to Take
Judicial Notice in Support of their Motion to Dismiss.
Defendants’ Request for the Court to Take Judicial Notice
(ECF No. 8-2) is GRANTED.
Defendants’ Motion to Dismiss (ECF No. 8) is GRANTED.
Plaintiffs are permitted LEAVE TO FILE A MOTION TO AMEND their
Complaint consistent with this Order.
PROCEDURAL HISTORY
On May 24, 2016, Plaintiffs Merlita Agbannaoag and Jerry
Agbannaoag filed a Complaint in the Circuit Court of the Second
Circuit, State of Hawaii.

(Complaint attached as Ex. 1 to

Defendants’ Notice of Removal, ECF No. 1).
On July 14, 2016, Defendants Ocwen Loan Servicing, LLC and
Deutsche Bank National Trust Company removed the state court
action to the United States District Court for the District of
Hawaii.

(ECF No. 1).

On July 20, 2016, Defendants filed a MOTION TO DISMISS and a
REQUEST FOR JUDICIAL NOTICE IN SUPPORT OF MOTION TO DISMISS
PLAINTIFFS’ COMPLAINT.

(ECF Nos. 8, 8-2).

3

On July 28, 2016, the Court issued a briefing schedule.
(ECF No. 10).
17, 2016.

Plaintiffs’ Opposition was due on or before August

(Id.)

Plaintiffs did not file their Opposition on or before August
17, 2016.
On September 2, 2016, Plaintiffs filed PLAINTIFF’S EX PARTE
MOTION FOR LEAVE TO FILE A MEMORANDUM IN OPPOSITION TO
DEFENDANT’S MOTION TO DISMISS PLAINTIFF’S COMPLAINT, claiming
excusable neglect.

(ECF No. 12).

On September 6, 2016, the Court issued a Minute Order
granting Plaintiffs’ Request to file their Opposition.
13).

(ECF No.

The Court also provided Defendants with additional time to

file their Reply.

(Id.)

On September 16, 2016, Plaintiffs filed their MEMORANDUM IN
OPPOSITION TO DEFENDANT’S MOTION TO DISMISS PLAINTIFF’S
COMPLAINT.
half pages.

(ECF No. 16).

The Opposition consisted of two and a

The contents were limited to an argument that Hawaii

state procedural law applied rather than the Federal Rules of
Civil Procedure.

(Id.)

On September 30, 2016, Defendants filed DEFENDANTS’ REPLY IN
SUPPORT OF MOTION TO DISMISS PLAINTIFF’S COMPLAINT.

(ECF No.

17).
On October 17, 2016, a hearing was held on Defendants’
Motion to Dismiss.

4

BACKGROUND
The Complaint states that on February 1, 2005, Plaintiffs
Merlita and Jerry Agbannaoag (“Plaintiffs”) executed an
Adjustable Rate Note in the amount of $395,000 to AmeriFund
Financial, Inc. to purchase real property on the island of Maui.
(Complaint at ¶ 3, ECF No. 1; see Adjustable Rate Note dated
February 1, 2005, attached as Ex. B to Defendants’ Request for
Judicial Notice at pp. 14-18, ECF No. 8-4).
The Complaint asserts that repayment of the Note was secured
by a Mortgage, which was recorded against the real property
purchased by Plaintiffs.

(Complaint at ¶¶ 3, 42, ECF No. 1;

Mortgage attached to Plaintiff’s Complaint, recorded in the State
of Hawaii Bureau of Conveyances on February 10, 2005, Doc. No.
2005-027341, at pp. 31-44, ECF No. 1).
Plaintiffs allege that the Note and Mortgage were assigned
to Defendant Deutsche Bank National Trust Company (“Defendant
Deutsche Bank”).

(Complaint at ¶¶ 4, 43, ECF No. 1; Assignment

of Mortgage, attached as Ex. B to Defendants’ Request for
Judicial notice at p. 45, ECF No. 8-4).

Plaintiffs assert that

Defendant Ocwen Loan Servicing, LLC (“Defendant Ocwen Loan
Servicing”) is the servicer of their Loan and is responsible for

5

collecting payments and applying the payments to their debt.
(Complaint at ¶¶ 5, 18, 42, ECF No. 1).
Plaintiffs assert that both Defendants engaged in bad faith,
unfair and deceptive practices, interfered with business
relationships, and violated the Fair Debt Collection Practices
Act by failing to fulfill their obligations to the Plaintiffs,
failing to correct errors in their account, failing to respond to
written requests, charging interest off inaccurate principal
balances, charging fraudulent fees, and failing to properly
oversee and manage the servicing of their loan.

(Id. at ¶¶ 53,

56, 59, 62, 86).
Plaintiffs allege that Defendants instructed Plaintiffs “to
default in order to qualify for a loan modification and then
failed to mitigate damages and offered an unaffordable loan
modification with payments higher than the original payment
causing them to charge excessive late fees and penalties,
interest on a higher principal amount, inspection fees when
services were never rendered, and legal fees and costs.”

(Id. at

¶¶ 67, 78, 101).
STANDARD OF REVIEW

The Court must dismiss a complaint as a matter of law
pursuant to Federal Rule of Civil Procedure 12(b)(6) where it
fails “to state a claim upon which relief can be granted.”

Rule

(8)(a)(2) of the Federal Rules of Civil Procedure requires “a
6

short and plain statement of the claim showing that the pleader
is entitled to relief.”

When considering a Rule 12(b)(6) motion

to dismiss, the Court must presume all allegations of material
fact to be true and draw all reasonable inferences in favor of
the non-moving party.
Cir. 1998).

Pareto v. F.D.I.C., 139 F.3d 696, 699 (9th

Conclusory allegations of law and unwarranted

inferences are insufficient to defeat a motion to dismiss.
at 699.

Id.

The Court need not accept as true allegations that

contradict matters properly subject to judicial notice or
allegations contradicting the exhibits attached to the complaint.
Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th
Cir. 2001).
In Bell Atl. Corp. v. Twombly, the United States Supreme
Court addressed the pleading standards under the Federal Rules of
Civil Procedure in the anti-trust context.

550 U.S. 544 (2007).

The Supreme Court stated that Rule 8 of the Federal Rules of
Civil Procedure “requires more than labels and conclusions, and a
formulaic recitation of the elements of a cause of action,” and
that “[f]actual allegations must be enough to raise a right to
relief above the speculative level.”

Id. at 555.

Most recently, in Ashcroft v. Iqbal, the Supreme Court
clarified that the principles announced in Twombly are applicable
in all civil cases.

129 S.Ct. 1937 (2009).

The Court stated

that “the pleading standard Rule 8 announces does not require

7

‘detailed factual allegations,’ but it demands more than an
unadorned, the-defendant-unlawfully-harmed-me-accusation.”
at 1949 (citing Twombly, 550 U.S. at 555).

Id.

To survive a motion

to dismiss, a complaint must contain sufficient factual matter,
accepted as true, to state a claim to relief that is plausible on
its face.

Id. (quoting Twombly, 550 U.S. at 570).

A claim has

facial plausibility when the plaintiff pleads factual content
that allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.
Twombly, 550 U.S. at 556).

Id. (citing

The plausibility standard is not akin

to a “probability requirement,” but it asks for more than a sheer
possibility that a defendant has acted unlawfully.
Twombly, 550 U.S. at 556).

Id. (quoting

Where a complaint pleads facts that

are “merely consistent with” a defendant’s liability, it “stops
short of the line between possibility and plausibility of
‘entitlement to relief.’”

Id. (quoting Twombly, 550 U.S.

at 557).
The complaint “must contain sufficient allegations of
underlying facts to give fair notice and to enable the opposing
party to defend itself effectively” and “must plausibly suggest
an entitlement to relief, such that it is not unfair to require
the opposing party to be subjected to the expense of discovery
and continued litigation.”

AE ex rel. Hernandez v. Cnty of

8

Tulare, 666 F.3d 631, 637 (9th Cir. 2012) (internal quotations
omitted).

ANALYSIS

I.

DEFENDANTS’ REQUEST FOR JUDICIAL NOTICE (ECF No. 8-2)
The Court may consider exhibits attached to the Complaint

and documents whose contents are incorporated by reference in the
Complaint without converting a motion to dismiss to a motion for
summary judgment.

Davis v. HSBC Bank Nevada, N.A., 691 F.3d

1152, 1160 (9th Cir. 2012).
Here, the Court will consider the Mortgage attached as Ex. 1
to Plaintiffs’ Complaint.

(ECF No. 1 at pp. 31-46).

The Court may also consider matters that are the proper
subject of judicial notice pursuant to Federal Rule of Evidence
201.

Lee v. City of Los Angeles, 250 F.3d 668, 688-89 (9th Cir.

2001); Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S.
308, 322 (2007).

Federal Rule of Evidence 201 allows a court to

take judicial notice of public documents.

Barber v. Ohana

Military Communities, LLC, 2014 WL 3529766, *4 (D. Haw. July 15,
2014).
Defendants’ Request for Judicial Notice seeks judicial
notice of publicly available Court records from the United States
Bankruptcy Court of Hawaii in Case Nos. 11-02518 and 12-01401
that involve the Plaintiffs and Defendant Deutsche Bank.
9

The Court grants the Defendants’ Motion to consider the
following documents pertaining to Plaintiff Jerry Agbannaoag:
(1)

Chapter 7 Voluntary Petition filed by Plaintiff Jerry
Agbannaoag dated September 22, 2011, in the United
States Bankruptcy Court of Hawaii, Case No. 11-02518,
attached as Ex. A (ECF No. 8-3);

(2)

Motion for Relief from Stay filed by Defendant Deutsche
Bank National Trust Company dated December 16, 2011, in
the United States Bankruptcy Court of Hawaii, Case No.
11-02518, attached as Ex. B (ECF No. 8-4);

(3)

Order Granting Relief from Stay dated January 5, 2012,
in the United States Bankruptcy Court of Hawaii, Case
No. 11-02518, attached as Ex. C (ECF No. 8-5); and

(4)

Discharge of Debtor for Plaintiff Jerry Agbannaoag
dated April 18, 2012, in the United States Bankruptcy
Court of Hawaii, Case No. 11-02518, attached as Ex. D
(ECF No. 8-6).

The Court will also consider the following documents
pertaining to Plaintiff Merlita Agbannaoag:
(5)

Chapter 7 Voluntary Petition filed by Merlita
Agbannaoag dated July 5, 2012, in the United States
Bankruptcy Court of Hawaii, Case No. 12-01401, attached
as Ex. E (ECF No. 8-7); and

(6)

Discharge of Debtor for Plaintiff Merlita Agbannaoag
dated October 11, 2012, in the United States Bankruptcy
Court of Hawaii, Case No. 12-01401, attached as Ex. F
(ECF No. 8-8).

It is well established that federal courts may take judicial
notice of related court orders and proceedings in deciding a
Motion to Dismiss.

ScripsAmerica, Inc. v. Ironridge Global LLC,

56 F.Supp.3d 1121, 1136 (C.D. Cal. 2014) (citing United States v.
Black, 482 F.3d 1035, 1041 (9th Cir. 2007)).
10

Defendants’ Request for Judicial Notice (ECF No. 8-2) is
GRANTED.
II.

DEFENDANTS’ MOTION TO DISMISS (ECF No. 8)
A.

Pleading Standard

As an initial matter, Plaintiffs’ Opposition (ECF No. 16)
relies on an incorrect pleading standard.

There are three

problems with Plaintiffs’ position.
First, Plaintiffs cite decisions from the State of Hawaii
courts.

Hawaii state procedural laws are inapplicable.

district courts apply federal procedural law.
Tompkins, 304 U.S. 64, 78-80 (1938).

Federal

Erie R.R. Co. v.

The Federal Rules of Civil

Procedure govern the pleading standards in federal district
court.
Second, the applicable pleading standard was set forth by
the United States Supreme Court in Iqbal v. Ashcroft, 129 S.Ct.
1937, 1949 (2009) and Bell Atlantic Corp. v. Twombly, 550 U.S.
544, 555 (2007).

A complaint must contain sufficient factual

matter, accepted as true, to state a claim for relief that is
plausible on its face.

Iqbal, 129 S.Ct. at 1949.

Third, claims alleging fraudulent business practices must be
pled with particularity pursuant to Federal Rule of Civil
Procedure 9(b).

Lizza v. Deutsche Bank Nat. Trust Co., 1 F.Supp.

3d 1106, 1121 (D. Haw. 2014).

Rule 9(b) requires a party

asserting a fraud claim to “state with particularity the
11

circumstances constituting fraud or mistake.”
9(b).

Fed. R. Civ. P.

The claim must be accompanied by the “who, what, when,

where and how” of the misconduct charged.

Kearns v. Ford Motor

Co., 567 F.3d 1120, 1124 (9th Cir. 2009) (internal citation and
quotation marks omitted).
At the hearing on October 17, 2016, the Court discussed with
Plaintiffs’ attorney Stuart Ragan the standard for pleading in
federal court pursuant to Iqbal v. Ashcroft, 129 S.Ct. 1937, 1949
(2009) and Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555
(2007).

The Court inquired as follows:

Court:

Have you been instructed previously, Mr. Ragan,
that you have to follow Twombly and Iqbal?

Ragan:

No, Your Honor, I don’t believe so.

Court:

You have not had a motion to dismiss granted based
on lack of particularity?

Ragan:

I would have to go through that, Your Honor, and I
don’t want to say, obviously with all of the
cases, I want to be absolutely accurate.

Review of the records from the District Court for the
District of Hawaii demonstrate that Attorney Ragan has appeared
in 23 different cases in federal court either by filing a
complaint in federal court or by removal.

Each case involved

similar lawsuits involving foreclosure and the mortgage loan
industry.
Attorney Ragan has been put on notice in nine separate
orders issued by various judges from the District Court of the

12

District of Hawaii that his pleadings were deficient and that
complaints that he drafted failed to meet the pleading standard
set forth in Iqbal, 129 S.Ct. 1937 and Twombly, 550 U.S. 544.
See Doronio v. OneWest Bank FSB, Order Dismissing Complaint,
Civ. No. 10-00698 JMS-LK, Dkt. Entry 4, dated November 30, 2010;
Bridge v. Flagstar Bancorp, Inc., Order Granting Defendant’s
Motion to Dismiss, Civ. No. 11-00035 DAE-BMK, Dkt. Entry 23,
dated October 3, 2011;
Borowiec v. Deutsche Bank Nat’l Trust Co., Order Granting
Defendants’ Motion to Dismiss, Civ. No. 11-cv-00094 DAE-KSC, 2011
WL 2940489, *2 (D. Haw. July 19, 2011);
Medeiros v. BAC Home Loans Servicing, LP, Order Granting
Motion to Dismiss, In Part, Civ. No. 11-00205 LEK-KSC, Dkt. Entry
27, dated July 13, 2011;
Boyd v. Federal Home Loan Mortgage Corp., Order Granting
Defendants’ Motion to Dismiss, Civ. No. 11-00320 ACK-BMK, Dkt.
Entry 20, dated August 10, 2011;
Conley v. Bank of New York Mellon Corp., Order Granting
Defendants’ Motion to Dismiss, Civ. No. 11-00582 DAE-BMK, 2012 WL
406911, *2 (D. Haw. Feb. 7, 2012);
Haro v. Bank of New York Mellon Corp., Order Granting
Defendants’ Motion to Dismiss, In Part, Civ. No. 11-00604 LEKBMK, 2012 WL 912924, *3 (D. Haw. March 16, 2012);

13

Burkitt v. Bank of America, N.A., Order Granting Defendants’
Motions to Dismiss, Civ. No. 12-00442 ACK-KSC, Dkt. Entry 39,
dated June 3, 2013;
Cablay v. Bank of America, N.A., Order Granting Motion to
Dismiss Complaint, Civ. No. 12-00648 JMS-KSC, 2013 WL 1789770, *2
(D. Haw. April 26, 2013).
Attorney Ragan is put on notice that further deficient
filings may result in sanctions pursuant to Federal Rule of Civil
Procedure 11.

See Ragan v. Finance America, LLC, Civ. No. 2010

WL 4961487, *5 (D. Haw. Nov. 30, 2010) (finding Attorney Stuart
Ragan’s motion was “spurious and a waste of the court’s and
parties’ time”); Medeiros v. BAC Home Loans Servicing, LP, Civ.
No. 11-00205 LEK-KSC, Dkt. Entry 40 at pp. 8-11, dated Sept. 22,
2011) (finding that Attorney Stuart Ragan failed to comply with
the previous Court order).
B.

Plaintiffs’ Claim for Breach of Implied Covenant of
Good Faith and Fair Dealing Pursuant to Haw. Rev. Stat.
§ 490:1-304
(Referenced in Plaintiffs’ Prayer for Relief as Count
I)

Plaintiffs contend that Defendants violated Section 490:1304 of the Hawaii Revised Statutes.
ECF No. 1).

(Complaint at ¶¶ 52, 64-82,

The statute cited by Plaintiffs is found in the

Hawaii Revised Statutes, Chapter 490, entitled “Uniform
Commercial Code.”
14

Haw. Rev. Stat. § 490:1-304 provides:
Obligation of good faith.
Every contract or duty within this chapter imposes an
obligation of good faith in its performance and
enforcement.
Plaintiffs attempt to invoke Haw. Rev. Stat. § 490:1-304 to
assert a claim of “bad faith.”

See Best Place v. Penn. Am. Ins.

Co., 920 P.2d 334, 342 (Haw. 1996).

Hawaii law recognizes that

every contract contains an implied covenant of good faith and
fair dealing that neither party will do anything that will
deprive the other of the benefits of the agreement.

Id.

Breach

of the implied covenant of good faith is not its own cause of
action but merely part of a breach of contract analysis.
Stoebner Motors, Inc. v. Automobili Lamborghini S.P.A., 459
F.Supp.2d 1028, 1037 (D. Haw. 2006).
Review of the Comments to Official Text for Section 490:1304 demonstrates that Section 490:1-304 does not provide an
independent cause of action to enforce the implied covenant of
good faith and fair dealing.

Comment 1 states, as follows:

This section sets forth a basic principle running
throughout the Uniform Commercial Code. The principle
is that in commercial transactions good faith is
required in the performance and enforcement of all
agreements or duties....
This section does not support an independent cause of
action for failure to perform or enforce in good faith.
Rather, this section means that a failure to perform or
enforce, in good faith, a specific duty or obligation
under the contract, constitutes a breach of that
contract or makes unavailable, under the particular
circumstances, a remedial right or power. This
15

distinction makes it clear that a doctrine of good
faith merely directs a court towards interpreting
contracts within the commercial context in which they
are created, performed, and enforced, and does not
create a separate duty of fairness and reasonableness
which can be independently breached.
Comments to Official Text 1, Haw. Rev. Stat. § 490:1-304.
Hawaii federal district courts have regularly held that
Section 490:1-304 does not provide a basis for a plaintiff to sue
for damages or to set aside a Note or a Mortgage in the context
of a mortgage loan contract.

Au v. Republic State Mortgage Co.,

2012 WL 3113147, at *10 (D. Haw. July 31, 2012) (citing Mazan v.
Bank of Am., 779 F.Supp.2d 1140, 1147 (D. Haw. 2011)).
Even if such a cause of action existed, Plaintiffs have
failed to allege sufficient facts to establish a claim based on
the implied covenant of good faith and fair dealing.

Long v. JP

Morgan Chase Bank, Nat’l Ass’n, Civ. No. 10-00046 DAE-KSC, 848
F.Supp.2d 1166, 1180 (D. Haw. 2012);

Hoilien v. Bank of Am.,

Civ. NO. 10-00761 DAE-KSC, 2011 WL 3494523, *4 (D. Haw. Aug. 10,
2011).
Plaintiffs have failed to make allegations as to the
specific contractual relationship that they have with the two
separate Defendants.

Long, 848 F.Supp.2d at 1180.

The Complaint

suggests that there was no contractual relationship between
Plaintiffs and Defendant Ocwen Loan Servicing as it is alleged
that Defendant Ocwen Loan Servicing was the loan servicer and not
a party with any contractual privity to the Plaintiffs.
16

See Conder v. Home Sav. of Am., 680 F.Supp.2d 1168, 1174 (C.D.
Cal. 2010) (finding that plaintiff failed to state a claim for
breach of contract against the loan servicer because there was no
contractual privity).
Plaintiffs make conclusory allegations that both Defendants
acted in bad faith, exercised poor business judgment, failed to
fulfill their obligations under the contract, failed to correct
errors in Plaintiffs’ account, instructed Plaintiffs to default
on payments, failed to respond to written requests, charged
interest off inaccurate principal balances, and charged
fraudulent fees.
1).

(Complaint at ¶¶ 50, 53-56, 66-67, 78, ECF No.

Plaintiffs’ laundry list of acts allegedly conducted by

Defendants fails to state a claim.

Anderson v. Central Pacific

HomeLoans, Inc., 2011 WL 3439939, *6-*7 (D. Haw. Aug. 8, 2011).
Plaintiffs allegations do not provide the time, place, and
specific content of any of the alleged wrongs of the Defendants.
Dias v. Fed. Nat’l Mortg. Ass’n, 990 F.Supp.2d 1042, 1059 (D.
Haw. 2013); Anderson, 2011 WL 3439939, at *6-*7.
Defendants’ Motion to Dismiss as to Plaintiffs’ Claim for
Breach of Implied Covenant of Good Faith and Fair Dealing is
GRANTED WITH PREJUDICE.

17

C.

Plaintiffs’ Claim for Tortious Breach of Implied
Covenant of Good Faith and Fair Dealing
(Referenced in Plaintiffs’ Prayer for Relief as Count
II)

Plaintiffs’ Count II is missing from the Complaint along
with a number of allegations as paragraphs 68-74 and 88-99 are
not present.
Plaintiffs’ Prayer for Relief asserts that Count II is for a
tortious breach of the implied covenant of good faith and fair
dealing regarding the Plaintiffs’ mortgage.

(Complaint’s Prayer

for Relief at p. 29, ¶ 2, ECF No. 1).
Hawaii federal district courts have uniformly held that a
tort cause of action for bad faith does not exist in the context
of a mortgage loan contract.

Ramelb v. Newport Lending Corp.,

Civ. No. 12-00618 DKW-RLP, 2014 WL 229186, *3 (D. Haw. Jan. 14,
2014) (citing Jou v. Nat’l Interstate Ins. Co. Of Haw., 157 P.3d
561, 568 (Haw. App. 2007); Gray v. OneWest Bank, Fed. Sav. Bank,
Civ. No. 13-00547 JMS-KSC, 2014 WL 3899548, *9 (D. Haw. Aug. 11,
2014); Tedder v. Deutsche Bank Nat. Trust Co., Civ. NO. 11-00083
LEK-KSC, 863 F.Supp.2d 1020, 1039 (D. Haw. 2012).
Defendants’ Motion to Dismiss as to Plaintiffs’ Claim for
Tortious Breach of Implied Covenant of Good Faith and Fair
Dealing is GRANTED WITH PREJUDICE.

18

D.

Plaintiffs’ Claim for Unfair and Deceptive Trade
Practices Pursuant to Haw. Rev. Stat. § 480-2
(Referenced in Plaintiffs’ Prayer for Relief as Count
III)

Plaintiffs allege that Defendants violated Hawaii’s Unfair
and Deceptive Trade Practices Act, Haw. Rev. Stat. § 480-2.
Section 480-2 of the Hawaii Revised Statutes prohibits unfair
methods of competition and unfair or deceptive acts or practices
in the conduct of any trade or commerce.
2(a).

Haw. Rev. Stat. § 480-

A consumer brings a unfair and deceptive trade practice

(“UDAP”) claim pursuant to Haw. Rev. Stat. § 480-13(b).
In order to state a UDAP claim, the plaintiff must allege
three elements:
(1)

a violation of Haw. Rev. Stat. 480-2;

(2)

injury to the plaintiff’s business or property
resulting from such violation; and,

(3)

proof of the amount of damages.

Lizza, 1 F.Supp.3d at 1121.
A practice is considered to be unfair if it offends
established public policy and when the practice is immoral,
unethical, oppressive, unscrupulous or substantially injurous to
consumers.

Bathazar v. Verizon Haw., Inc., 123 P.3d 194, 202

(Haw. 2005).

An act is deceptive when it is a material

representation, omission, or practice, that is likely to mislead

19

reasonable consumers.

In re Kekauoha-Alisa, 674 F.3d 1083, 1091

(9th Cir. 2012).
A UDAP claim alleging fraudulent business practices must be
pled with particularity pursuant to Federal Rule of Civil
Procedure 9(b).

Smallwood v. Ncsoft Corp., 730 F.Supp.2d 1213,

1232 (D. Haw. 2010).

An injury resulting from a UDAP claim must

be “fairly traceable to the defendant’s actions.”

Agard v.

Deutsche Bank Nat. Trust. Co., 344 P.3d 358, *2 (Haw. App. 2015)
(citing Flores v. Rawlings Co., 177 P.3d 341, 355 n.23 (Haw.
2008)).
Plaintiffs claim that both Defendants Deutsche Bank and
Ocwen Loan Servicing engaged in unfair and deceptive acts.
(Complaint at ¶ 44, ECF No. 1).

Plaintiffs assert that both

Defendants “instructed the [Plaintiffs] to default in order to
qualify for a loan modification and then failed to mitigate
damages and offered an unaffordable loan modification with
payments higher than the original payment, and failing to correct
errors when requested.”

(Id. at ¶ 86).

Plaintiffs claim that

Defendants’ acts caused “excessive late fees and penalties,
interest on a higher principal amount, inspection fees when
services were never rendered, and legal fees and costs.”

(Id. at

¶ 101).
Plaintiffs have failed to state a UDAP claim with sufficient
particularity.

A plaintiff must state the time, place and

20

specific content of the unfair and deceptive practice as well as
the identities of the parties to the action.

Dias, 990 F.Supp.2d

at 1059; Alan Neuman Productions, Inc. v. Albright, 862 F.2d
1388, 1393 (9th Cir. 1988).

The circumstances constituting fraud

must be “specific enough to give defendants notice of the
particular misconduct ... so that they can defend against the
charge and not just deny that they have done anything wrong.”
Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003)
(quoting Neubronner v. Milken, 6 F.3d 666, 672 (9th Cir. 1993)).
Plaintiffs’ conclusory allegations that do not specify the
time, place, and specific content of the allegedly unfair and
deceptive practice are insufficient to state a UDAP claim.
Lowther v. U.S. Bank N.A., Civ. NO. 13-00235 LEK-BMK, 2014 WL
2452598, *3 (D. Haw. May 30, 2014).
Defendants’ Motion to Dismiss as to Plaintiffs’ Claim for
Unfair and Deceptive Trade Practices is GRANTED WITH LEAVE TO
FILE A MOTION TO AMEND.

E.

Plaintiffs’ Claim for Tortious Interference with
Business Relations
(Referenced in Plaintiffs’ Prayer for Relief as Count
IV)

Pursuant to Hawaii law, tortious interference with business
relations involves conduct that is not directed at the plaintiff
itself, but at a party with which the plaintiff has or seeks to

21

have a relationship.

Kailua Local Cab, Inc. v. AJA Motors Corp.,

257 P.3d 1219, 2011 WL 1334960, *11 (Haw. Ct. App. 2011).

To

state a claim for tortious interference with business relations,
a plaintiff must allege:
(1)

the existence of a valid business relationship or a
prospective advantage or expectancy sufficiently
definite, specific, and capable of acceptance in the
sense that there is a reasonable probability of it
maturing into a future economic benefit to the
plaintiff;

(2)

knowledge of the relationship, advantage, or
expectancy;

(3)

a purposeful intent to interfere with the relationship,
advantage, or expectancy;

(4)

legal causation between the act of interference and the
impairment of the relationship, advantage, or
expectancy; and,

(5)

actual damages.

Standard Register Co. v. Keala, Civ. No. 14-00291 JMS-RLP,
2014 WL 3420785, *8 (D. Haw. July 11, 2014) (citing Haw. Med.
Ass’n v. Haw. Med. Serv. Ass’n, Inc., 148 P.3d 1179, 1218 (Haw.
2006)).
Plaintiffs did not allege any facts demonstrating a
contractual relationship between themselves and any third party
with whom they seek to have a business relationship.

Plaintiffs

have not asserted that Defendants had knowledge of any such
relationship or any intent to interfere with such a relationship.

22

Defendants’ Motion to Dismiss as to Plaintiffs’ Claim for
Tortious Interference with Business Relations is GRANTED WITH
LEAVE TO FILE A MOTION TO AMEND.

F.

Plaintiffs’ Claim for Violations of the Fair Debt
Collection Practices Act, 15 U.S.C. § 1692 et seq.
(Referenced in Plaintiffs’ Prayer for Relief as Count
V)

The Fair Debt Collection Practices Act (“FDCPA”) was enacted
to eliminate abusive debt collection practices by debt collectors
and to protect consumers against debt collection abuse.

15

U.S.C. § 1692(e); Schlegel v. Wells Fargo Bank, NA, 720 F.3d
1204, 1207 (9th Cir. 2013).
Plaintiffs’ Complaint does not assert which provision of the
FDCPA Defendants allegedly violated.

To be liable for violating

any provision of the FDCPA, a defendant must be a “debt
collector” within the meaning of the statute.

Heintz v. Jenkins,

514 U.S. 291, 292 (1995).
The FDCPA defines “debt collector” as “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.”

15 U.S.C. § 1692a(6).

Courts have consistently

interpreted that definition to hold that the FDCPA does not apply
23

to mortgage servicing companies or assignees of the mortgage debt
if the debt was not in default at the time the debt was obtained.
Christie v. Bank of New York Mellon, N.A., 617 Fed. Appx. 680,
683 (9th Cir. 2015); Bailey v. Sec. Nat’l Servicing Corp., 154
F.3d 384, 387 (7th Cir. 1998); Perry v. Stewart Title Co., 756
F.2d 1197, 1208 (5th Cir. 1985); Klohs v. Wells Fargo Bank, N.A.,
901 F.Supp.2d 1253, 1258 (D. Haw. 2012); Fed. Nat’l Mortg. Ass’n
v. Kamakau, 2012 WL 622169, at *8 (D. Haw. Feb. 23, 2012)
(“original lenders, creditors, mortgage servicing companies, and
mortgage brokers generally do not qualify as debt collectors
under the FDCPA”).
Plaintiffs have not alleged any facts that demonstrate that
either Defendants’ principal business purpose is collection of
debt or collection of debt of another.

Plaintiffs did not allege

any facts demonstrating the timing of when their Loan was in
default.

It appears from the allegations in the Complaint that

neither Defendant may qualify as a debt collector.

Jara v.

Aurora Loan Services, 852 F.Supp.2d 1204, 1211 (N.D. Cal. 2012).
Defendants’ Motion to Dismiss as to Plaintiffs’ Claim
pursuant to the Fair Debt Collection Practices Act is GRANTED
WITH LEAVE TO FILE A MOTION TO AMEND.

24

III. LEAVE TO FILE A MOTION TO AMEND

If Plaintiffs wish to proceed with their lawsuit, Plaintiffs
must file a Motion for Leave to File an Amended Complaint before
the Magistrate Judge on or before Wednesday, November 30, 2016.
The Motion must set forth the legal basis for amendment and
explain their compliance with the rulings in this Order.
Plaintiffs shall attach their Proposed Amended Complaint to their
Motion.
Any Proposed Amended Complaint must contain sufficient
factual detail, including the time, place, and specific content
of any of the alleged wrong acts by the Defendants, in order to
state a plausible claim for relief pursuant to Ashcroft v. Iqbal,
129 S.Ct. 1937 (2009) and Bell Atlantic Corp. v. Twombly, 550
U.S. 544, 555 (2007).

Plaintiffs must distinguish between the

Defendants, and specifically identify which Defendant is alleged
to have committed which wrongful acts.
At the hearing on October 17, 2016, Defendants moved to
strike paragraphs ¶¶ 15-40 in Plaintiffs’ Complaint as being
irrelevant and immaterial.

(Complaint at pp. 15-19, ECF No. 1).

Plaintiffs must set forth the relevance and materiality of
paragraphs ¶¶ 15-40 if they are included in any Proposed Amended
Complaint.
Plaintiffs’ counsel is put on notice that failure to comply
with the rulings in this Order may result in sanctions pursuant
25

to Federal Rule of Civil Procedure 11.

See Rey v. Countrywide

Home Loans, Inc., Civ. No. 11-00142 JMS-KSC, 2011 WL 4103704, *3
(D. Haw. Sept. 13, 2011) (sanctioning the plaintiff’s attorney
for failing to comply with the court’s order and by realleging
claims that were previously dismissed without leave to amend).

CONCLUSION
Defendant Ocwen Loan Servicing, LLC and Defendant Deutsche
Bank National Trust Company’s Request for Judicial Notice (ECF
No. 8-2) is GRANTED.
Defendant Ocwen Loan Servicing, LLC and Defendant Deutsche
Bank National Trust Company’s Motion to Dismiss (ECF No. 8) is
GRANTED WITH LEAVE TO FILE A MOTION TO AMEND.

Plaintiffs’ claims are dismissed as follows:
(Count I)

Plaintiffs’ Claim for Breach of Implied
Covenant of Good Faith and Fair Dealing is
DISMISSED WITH PREJUDICE;

(Count II)

Plaintiffs’ Claim for Tortious Breach of
Implied Covenant of Good Faith and Fair
Dealing is DISMISSED WITH PREJUDICE;

(Count III)

Plaintiffs’ Claim for Unfair and Deceptive
Trade Practices is DISMISSED WITH LEAVE TO
FILE A MOTION TO AMEND;

(Count IV)

Plaintiffs’ Claim for Tortious Interference
with Business Relations is DISMISSED WITH
LEAVE TO FILE A MOTION TO AMEND; and,

26

(Count V)

Plaintiffs’ Claim pursuant to the Fair Debt
Collection Practices Act is DISMISSED WITH
LEAVE TO FILE A MOTION TO AMEND.

Plaintiffs may file a Motion for Leave to File an Amended
Complaint before the Magistrate Judge on or before Wednesday,
November 30, 2016.

The Proposed Amended Complaint must conform

to the rulings contained in this Order.
Failure to file a Motion for Leave to File an Amended
Complaint on or before Wednesday, November 30, 2016, will result
in automatic dismissal of this action.

IT IS SO ORDERED.
DATED:

Honolulu, Hawaii, October 25, 2016.

______________________________
_____
Helen Gillmor
United States District Judge

Merlita Agbannaoag;Jerry Agbannaoag; v. Ocwen Loan Servicing,
LLC; Deutsche Bank National Trust Company; John Does 1-10; Jane
Does 1-10; Doe Partnerships 1-10; Doe Corporations 1-10; Doe
Entities 1-10; and Doe Governmental Units 1-10; Civ. No. 16-0394
HG-RLP; ORDER GRANTING DEFENDANTS OCWEN LOAN SERVICING, LLC AND
DEUTSCHE BANK NATIONAL TRUST COMPANY’S REQUEST FOR THE COURT TO
TAKE JUDICIAL NOTICE (ECF No. 8-2) and GRANTING DEFENDANTS OCWEN
LOAN SERVICING, LLC AND DEUTSCHE BANK NATIONAL TRUST COMPANY’S
MOTION TO DISMISS (ECF No. 8)
27