Wilson et al v. Government National Mortgage Association et al
Filing
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ORDER Granting Defendant CitiMortgage, Inc.'s Motion To Dismiss With Leave To Amend re 9 ."Plaintiffs Bryant Delmar Wilson and Tanisha Janeen Wilson ("Plaintiffs") have filed a multicount Complaint that appears to allege wrongful conduct regarding a mortgage loan Plaintiffs obtained on certain property in Kapolei, Hawaii (the Property). Defendant CitiMortgage, Inc. (CitiMortgage) has moved to dismiss the Complaint under Federal Rules of Civil Procedure 12(b)(1), 12(b )(6), and 12(b)(7). For the following reasons, Motion is GRANTED; Plaintiffs are granted leave to file an Amended Complaint in compliance with this decision no later than June 20, 2018." Signed by CHIEF JUDGE J. MICHAEL SEABRIGHT on 5/18/2018. (cib, )COURTS CERTIFICATE of Service - Non-Registered CM/ECF Participants have been served by First Class Mail to the addresses of record listed on the Notice of Electronic Filing (NEF)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
BRYANT DELMAR WILSON;
TANISHA JANEEN WILSON,
Civ. No. 18-00048 JMS-KSC
ORDER GRANTING
DEFENDANT CITIMORTGAGE,
INC.’S MOTION TO DISMISS,
ECF NO. 9, WITH LEAVE TO
AMEND
Plaintiffs,
vs.
GOVERNMENT NATIONAL
MORTGAGE ASSOCIATION AS
TRUSTEE FOR GINNIE MAE REMIC
TRUST 2009-032; CITIMORTGAGE,
Inc.,
Defendants.
ORDER GRANTING DEFENDANT CITIMORTGAGE, INC.’S MOTION
TO DISMISS, ECF NO. 9, WITH LEAVE TO AMEND
I. INTRODUCTION
Plaintiffs Bryant Delmar Wilson and Tanisha Janeen Wilson
(“Plaintiffs”) have filed a multicount Complaint that appears to allege wrongful
conduct regarding a mortgage loan Plaintiffs obtained on certain property in
Kapolei, Hawaii (“the Property”). Defendant CitiMortgage, Inc. (“CitiMortgage”)
has moved to dismiss the Complaint under Federal Rules of Civil Procedure
12(b)(1), 12(b)(6), and 12(b)(7). For the following reasons, the Motion is
GRANTED; Plaintiffs are granted leave to file an Amended Complaint in
compliance with this decision no later than June 20, 2018.
II. BACKGROUND
A.
Factual Background
Plaintiffs allege that they obtained a home mortgage loan on the
Property in 2009 from Home Savings of America Corporation. See Compl. ¶ 11,
ECF No. 1. They identify Defendant CitiMortgage as the “present servicer” on the
loan, although they also refer to the mortgage deed and note as having been
“originated by [CitiMortgage,]” and they assert that “Federal National Mortgage
Corporation was the successor in interest to [CitiMortgage].” Id. ¶¶ 6, 12, 41.
Their precise allegations regarding the loan are unclear, but they suggest that they
were not qualified for the loan when they obtained it, that they attempted to modify
the loan in 2011 and 2012 (and perhaps later), and that they were not properly
notified when the loan was purchased on one or more occasions. Id. ¶¶ 16, 38-39.
They also allege that they were “forced, tricked, and mislead [(sic)]into parting
with their property.” Id. ¶ 77. Reading between the lines of the Complaint, the
court surmises that the Property may have been or may now be the subject of a
foreclosure action. But the Complaint includes no details about any such
proceedings.1
1
At the hearing, counsel for CitiMortgage stated that no foreclosure proceeding is
pending.
2
The bulk of Plaintiffs’ factual allegations are simply indecipherable.
They appear to be mostly lengthy excerpts from an unattached “forensic audit . . .
performed on the property.” Id. ¶ 12. The author of this “audit” apparently opined
that he found “indicia of deception and fraud” and a cloud on “the chain of title on
the . . . mortgage deed” caused by CitiMortgage’s use of “deception and
fraudulent assignments to conceal the transfer history and identities of hidden
investors.” Id.; see also id. ¶¶ 12-41. The final numbered paragraph of the
“general allegations” comprises approximately eight pages of what appear to be
merely quotations from decisions in unrelated court cases involving unrelated
parties. Id. ¶ 42.
B.
Procedural Background
Plaintiffs filed their Complaint on February 2, 2018. ECF No. 1.
They allege eleven counts labeled as follows: (1) “Lack of Standing/Wrongful
Attempt to Foreclosure,” (2) “Fraud in the Concealment,” (3) “Fraud in the
Inducement,” (4) “Unconscionable Contract,” (5) “Breach of Contract,”
(6) “Breach of Fiduciary Duty,” (7) “Quiet Title,” (8) “Slander of Title,”
(9) “Declaratory Relief,” (10) “CCPA,” and (11) “Violation of Federal
Regulations, Regulation X, 12 C.F.R. § 1024.41 (b)(2)(i)(A).” ECF No. 1
(emphasis omitted). Defendant CitiMortgage filed its Motion to Dismiss on
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February 27, 2018, ECF No. 9, and this court set a due date of April 15, 2018 for
Plaintiffs’ Opposition. 2 ECF No. 8.
When no Opposition was filed by that date, this court ordered
Plaintiffs to file a written response by May 3, 2018, stating whether they intended
to oppose the Motion to Dismiss and if so, why they failed to meet the April 15,
2018 deadline. ECF No. 16. No such response or Opposition was filed before the
hearing, but the court accepted Plaintiffs’ written Opposition submitted and filed at
the hearing. ECF No. 19.
A hearing was held on May 8, 2018.
III. STANDARDS OF REVIEW
A.
Federal Rule of Civil Procedure 12(b)(6)
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.” A Rule 12(b)(6)
dismissal is proper when there is either a “lack of a cognizable legal theory or the
absence of sufficient facts alleged.” UMG Recordings, Inc. v. Shelter Capital
Partners, LLC, 718 F.3d 1006, 1014 (9th Cir. 2013) (quoting Balistreri v. Pacifica
Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1988)).
2
On March 22, 2018, Plaintiffs filed a Motion requesting additional time to respond and
leave to amend. ECF No. 13. Because the new due date that the Plaintiffs requested was
actually before the April 15 due date, however, the court denied the motion as moot. ECF No.
14.
4
“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.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007)); see also Weber v. Dep’t of Veterans Affairs,
521 F.3d 1061, 1065 (9th Cir. 2008). This tenet — that the court must accept as
true all of the allegations contained in the complaint — “is inapplicable to legal
conclusions,” and “[t]hreadbare recitals of the elements of a cause of action,
supported by mere conclusory statements, do not suffice.” Iqbal, 556 U.S. at 678
(citing Twombly, 550 U.S. at 555). Rather, “[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.” Id. (citing
Twombly, 550 U.S. at 556). Factual allegations that only permit the court to infer
“the mere possibility of misconduct” do not show that the pleader is entitled to
relief. Id. at 679.
The court liberally construes pro se pleadings. See Eldridge v. Block,
832 F.2d 1132, 1137 (9th Cir. 1987). “Unless it is absolutely clear that no
amendment can cure the defect . . . a pro se litigant is entitled to notice of the
complaint’s deficiencies and an opportunity to amend prior to dismissal of the
action.” Lucas v. Dep’t of Corr., 66 F.3d 245, 248 (9th Cir. 1995).
5
B.
Federal Rule of Civil Procedure 8
Dismissal may also be warranted for failure to comply with Federal
Rule of Civil Procedure 8. Rule 8 mandates that a complaint include a “short and
plain statement of the claim.” Fed. R. Civ. P. 8(a)(2). Further, it requires that
“each allegation must be simple, concise, and direct.” Fed. R. Civ. P. 8(d)(1). A
complaint that is so confusing that its “‘true substance, if any, is well disguised’”
may be dismissed for failure to satisfy Rule 8. Hearns v. San Bernardino Police
Dep’t, 530 F.3d 1124, 1131 (9th Cir. 2008) (quoting Gillibeau v. City of Richmond,
417 F.2d 426, 431 (9th Cir. 1969)).
C.
Federal Rule of Civil Procedure 9(b)
Federal Rule of Civil Procedure 9(b) requires that “[i]n all averments
of fraud or mistake, the circumstances constituting fraud or mistake shall be stated
with particularity.” “Rule 9(b) requires particularized allegations of the
circumstances constituting fraud.” In re GlenFed, Inc. Sec. Litig., 42 F.3d 1541,
1547-48 (9th Cir.1994) (en banc) (emphasis in original), superseded on other
grounds by 15 U.S.C. § 78u-4.
In their pleadings, Plaintiffs must include the time, place, and nature
of the alleged fraud; “mere conclusory allegations of fraud are insufficient” to
satisfy this requirement. Id. (citation and quotation signals omitted). Where there
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are multiple defendants, Plaintiffs cannot “lump multiple defendants together” but
instead must “differentiate their allegations [between defendants].” Destfino v.
Reiswig, 630 F.3d 952, 958 (9th Cir. 2011) (citation omitted). However, “[m]alice,
intent, knowledge, and other conditions of a person’s mind may be alleged
generally.” Fed. R. Civ. P. 9(b); see also In re GlenFed, Inc. Sec. Litig., 42 F.3d at
1547 (“We conclude that plaintiffs may aver scienter . . . simply by saying that
scienter existed.”); Walling v. Beverly Enters., 476 F.2d 393, 397 (9th Cir. 1973)
(Rule 9(b) “only requires the identification of the circumstances constituting fraud
so that the defendant can prepare an adequate answer from the allegations.”
(citations omitted)).
A motion to dismiss for failure to plead with particularity is the
functional equivalent of a motion to dismiss under Fed. R. Civ. P. 12(b)(6). Vess v.
Ciba-Geigy Corp. USA, 317 F.3d 1097, 1107 (9th Cir. 2003). In considering a
motion to dismiss, the court is not deciding the issue of “whether a plaintiff will
ultimately prevail but whether the claimant is entitled to offer evidence to support
claims.” Scheuer v. Rhodes, 416 U.S. 232, 236 (1974), overruled on other grounds
by Harlow v. Fitzgerald, 457 U.S. 800 (1982).
///
///
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IV. DISCUSSION
A.
Counts One, Seven, and Nine: “Lack of Standing/Wrongful Attempt to
Foreclosure,” “Quiet Title,” and “Declaratory Relief”
Although numbered separately, these Counts contain overlapping
allegations. Plaintiffs assert in Count One that “[n]o Defendant [h]as [s]tanding to
[f]oreclose.” Compl. ¶ 43 (emphasis omitted). They request that the court make
certain findings, including that “the purported power of sale contained in the Deed
of Trust is a nullity” and that “any attempted sale of the Real Property is ‘unlawful
and void.’” Id. ¶ 45. Plaintiffs also assert that “Defendants . . . claim the right to
illegally commence foreclosure sale of Plaintiff’s Real Property under the
Mortgage/Deed of Trust . . . via an in Rem action supported by false or fraudulent
documents,” and they claim that “[s]aid unlawful foreclosure action has caused and
continues to cause Plaintiff’s (sic) great and irreparable injury in that Real Property
is unique.” Id. ¶ 54. They request “injunctive relief prayed for below,” which
relief is requested in Count Seven.3 Id. ¶ 56.
3
Plaintiffs also include multiple allegations in Count One regarding “Defendant MERS.”
See id. ¶¶ 46-53. “MERS,” commonly used to refer to the Mortgage Electronic Registration
System, is neither named in the caption as a defendant nor listed under the heading “PARTIES.”
If Plaintiffs intend to name MERS as a defendant in an amended complaint, they should name
MERS in the caption.
8
In Count Seven, “Quiet Title,” Plaintiffs assert that “Defendants
named herein” claim an interest or right to the Property, claim to be “owner of the
note secured by the Mortgage/Deed of Trust” and “owner of Tangible Note
secured by the Mortgage/Deed of Trust,” and they assert that such claims
“constitute a cloud on Plaintiff’s title.” Id. ¶¶ 95-96, 98. They request a “decree
permanently enjoin[ing] defendants . . . and all persons claiming under them, from
asserting any adverse claim to Plaintiff’s title to the property . . . .” Id. ¶ 100.
In Count Nine, Plaintiffs assert they “should be the equitable owner of
the Subject Property,” and they describe their requested relief as follows:
Plaintiff seeks to quiet title as of the date of the filing of
this Complaint. Plaintiff seeks a judicial declaration that
the title to the Subject Property is vested in Plaintiff
alone and that the Defendants be declared to have no
interest estate, right, title, or interest in the subject
property and that the Defendants, their agents and
assigns, be forever enjoined from asserting any estate,
right title or interest in the Subject Property subject to
Plaintiff’s rights.
Id. ¶ 113.
Read together or separately, these Counts fail to state a claim upon
which relief can be granted. First, there is no such thing as a claim for “lack of
standing.” See Ramos v. Chase Home Fin., 810 F. Supp. 2d 1125, 1143 (D. Haw.
2011) (“[A] claim for ‘lack of standing’ makes no sense against a defendant.
Rather, standing is a requirement for a plaintiff in order to proceed in a lawsuit.”).
9
And as noted above, Plaintiffs have not alleged any details about a pending or
completed foreclosure proceeding, nor any specific allegedly wrongful conduct on
the part of Defendants regarding such proceedings.
Nor have Plaintiffs stated a cognizable claim to quiet title to the
Property or otherwise declare that Defendants have no interest in it. “[I]n order to
assert a claim for ‘quiet title’ against a mortgagee, a borrower must allege they
have paid, or are able to tender, the amount of indebtedness.” Id.; see also
Rosenfeld v. JPMorgan Chase Bank, N.A., 732 F. Supp. 2d. 952, 975 (N.D. Cal.
2010) (“A basic requirement of an action to quiet title is an allegation that
plaintiffs ‘are the rightful owners of the property, i.e., that they have satisfied their
obligations under the deed of trust.’” (quoting Kelley v. Mortg. Elec. Registration
Sys., 642 F. Supp. 2d 1048, 1057 (N.D. Cal. 2009))). Plaintiffs allege later in the
Complaint that “Defendant Ginnie Mae was paid in full for their Accommodated
capacity to the Tangible Note and Mortgage/Deed of Trust when it sold and
relinquished its interest in the Plaintiff’s real property to Ginnie Mae (Depositor).”
Compl. ¶ 87. But this allegation is nonsensical, and the court cannot construe it as
an assertion that Plaintiffs have satisfied their mortgage debt.
Accordingly, Counts One, Seven, and Nine of the Complaint are
DISMISSED with leave to amend. Plaintiffs may clarify their assertions with
10
regard to any foreclosure proceedings and, if factually possible, may also allege a
claim for quiet title; they may not, however, assert a claim titled “Lack of
Standing.”
B.
Counts Two and Three: “Fraud in the Concealment” and “Fraud in the
Inducement”
Here again, Plaintiffs’ statements are simply too vague and confusing
for the court to determine what claims they are attempting to allege. For example,
in Count Two, they make the following allegations regarding concealment:
• Defendant Fannie Mae concealed the fact that they were not a Federal
Reserve Depository Bank.
• Defendant GINNIE MAE concealed a third-party sponsor Bank warehouse
lender as well as the terms of the Securitization Agreements, including, inter
alia: (1) Financial Incentives paid; (2) existence of Credit Enhancement
Agreements, and (3) existence of Acquisition Provisions.
• By concealing the securitization, the true character of the purported loan in
this way had a materially negative effect on Plaintiff that was known by
GINNIE MAE but not disclosed.
Complaint ¶ 59.4 They make various vague and conclusory statements about
having been misled in unnamed transactions, and they also claim that “at the
original closing on 07/07/04 both Plaintiff’s signatures were forged on the original
note.” Id. ¶ 62.
4
The court assumes that by “Ginnie Mae” Plaintiffs mean Defendant Government
National Mortgage Association (“GNMA”). It is unclear whether Plaintiffs’ reference to
“Fannie Mae” is a typographical error, as “Fannie Mae” is not a Defendant in this case.
11
Count Three is no clearer. Plaintiffs allege that Defendants
“misrepresented” their interest in the Property and their right to “exercise the
power of sale provision contained in the Mortgage/Deed of Trust.” Id. ¶¶ 69-70.
They also allege that “material misrepresentations were made . . . with the intent
. . . to induce the Plaintiff to submit to the foreclosure on the Real Property as
opposed to recovering from predecessors in the § 1031 — Exchange on the
Payment Intangible Obligation.” Id. ¶ 72.
But in neither of these Counts have Plaintiffs come close to the level
of specificity described above that is required to plead fraud. Counts Two and
Three are therefore DISMISSED with leave to amend to allege specifically what
each Defendant did, said, or concealed, and when they did so. Plaintiffs must also
allege how those statements, actions, or omissions harmed Plaintiffs.
C.
Counts Four, Five, and Six: “Unconscionable Contract,” “Breach of
Contract,” and “Breach of Fiduciary Duty”
In Count Four, Plaintiffs make various allegations against “Defendant
Ginnie Mae” (“GNMA”) regarding the “origination of the purported loan,”
although it is unclear what role GNMA played in that process. Plaintiffs appear to
claim that they were not appropriately qualified for the loan, that GNMA failed to
disclose its role in the loan process as well as other information regarding the loan,
and that GNMA otherwise took advantage of or exploited them. Compl. ¶¶ 76-83.
12
Unconscionability, however, is not an independent cause of action;
rather, it is generally a defense to an action to enforce a contract. See Ragan v.
Fin. Am., LLC, 2011 WL 2457656, at *3 (D. Haw. 2011). And “‘a determination
of unconscionability . . . requires a showing that the contract was both procedurally
and substantively unconscionable when made,’ but there may be ‘exceptional cases
where a provision of the contract is so outrageous as to warrant holding it
unenforeceable on the ground of substantive unconscionability alone.’” Balogh v.
Balogh, 134 Haw. 29, 41, 332 P.3d 631, 643 (2014) (quoting Gillman v. Chase
Manhattan Bank, N.A., 534 N.E. 2d 824, 828-29 (1988)). Allegations that fail to
permit an inference of “[o]ne sidedness (i.e., substantive unconscionability)” or
“[u]nfair surprise (i.e., procedural unconscionability),” id., are thus insufficient.
Here, Plaintiffs have failed to clearly allege what contract their
allegations relate to, and they have failed to allege any facts that permit a plausible
inference of unconscionability. In Counts Five and Six, Plaintiffs contend that
GNMA and other Defendants breached a fiduciary duty to the Plaintiffs and
breached the release provisions in the Mortgage/Deed. They allege in Count Five
that “Defendant [GNMA] failed to satisfy, release and reconvey the security
instrument, thus breaching the terms found in paragraph 23 of the Mortgage/Deed
of Trust.” Id. ¶ 88. And in count Six, they allege that GNMA “failed to meet their
fiduciary duty to satisfy, release and reconvey the Real Property Lien Deed of
13
Trust and the beneficial security interest (personal property) therein after receiving
payment for all sums represented as the service release premium.” Id. ¶ 92.
But it is a “well-settled proposition that generally a borrower-lender
relationship is not fiduciary in nature.” Ramos, 810 F. Supp. 2d at 1140; see also
McCarty v. GCP Mgmt., LLC, 2010 WL 4812763, at *5 (D. Haw. Nov. 17, 2010)
(collecting cases). Further, Plaintiffs have not clearly alleged the terms of the
release provisions, let alone any facts allowing an inference that such terms were
breached. Therefore, Counts Four, Five, and Six are DISMISSED. Count Six
(“Breach of Fiduciary Duty”) is DISMISSED with prejudice. Plaintiffs are granted
leave to amend the Complaint to clarify their allegations regarding any breach of
contract and any allegations of unconscionability relevant to such a claim.
Plaintiffs may not, however, include a separate cause of action for
unconscionability.
D.
Count Eight: “Slander of Title”
Hawaii has adopted the following elements for the common-law tort
of slander of title:
(1) ownership of or interest in the property by the
plaintiff; (2) falsity of the words published; (3) malice of
the defendant in publishing the false statements;
(4) publication to some person other than the owner
(5) publication in disparagement of plaintiff’s property or
the title to it; and (6) special damages proximately
resulting from such publication.
14
Isobe v. Sakatani, 127 Haw. 368, 377-78, 279 P.3d 33, 42-43 (Ct. App. 2012).
And Hawaii law includes a two-year statute of limitation for “[a]ll actions for libel
or slander.” Haw. Rev. Stat. § 657-4.
Plaintiffs’ allegations that an “Assignment of Deed of Trust [was
recorded] into the Official Records of the Bureau of Conveyances in the State of
Hawaii,” see Compl. ¶ 110, and that Defendants “withheld” certain facts, see id.
¶¶ 104-106, fall clearly short of alleging a plausible claim for slander of title.
Moreover, the date of the alleged recording, September 12, 2014,
suggests that any claim they might be able to support factually would be time
barred. Nonetheless, the court DISMISSES Count Eight with leave to amend
should Plaintiffs be able to overcome these shortcomings.
E.
Counts Ten and Eleven: “CCPA” and “Violation of Federal
Regulations, Regulation X, 12 C.F.R. § 1024.41 (b)(2)(i)(A)”
Although these Counts are unclear, the court understands them to
assert claims under the Truth in Lending Act, § 1601, et. seq., and the
Real Estate Settlement Procedures Act, 12 U.S.C. §§ 2601-2617.
As pled, Counts Ten and Eleven fail to state a claim upon which relief
can be granted because Plaintiffs have not alleged facts allowing a reasonable
inference of liability. Moreover, based on what factual allegations are included in
the Complaint, Plaintiffs’ claims may be time barred.
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Counts Ten and Eleven are DISMISSED with leave to amend.
V. CONCLUSION
CitiMortgage’s Motion to Dismiss is GRANTED, and the Complaint
is DISMISSED with leave to amend as described above. The dismissal also
applies to other Defendants who have not appeared.5
IT IS SO ORDERED.
DATED: Honolulu, Hawaii, May 18, 2018.
/s/ J. Michael Seabright
J. Michael Seabright
Chief United States District Judge
Wilson v. Gov’t Nat’l Mortg. Assoc., Civ. No. 18-00048 JMS-KSC, Order Granting Defendant
CitiMortgage, Inc.’s Motion to Dismiss, ECF No. 9, with Leave to Amend
5
The court may dismiss a complaint pursuant to Federal Rule of Civil Procedure 12(b)(6)
on its own motion “where the claimant cannot possibly win relief.” Omar v. Sea-Land Serv.,
Inc., 813 F.2d 986, 991 (9th Cir. 1987). The court applies this standard and dismisses GNMA as
well.
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