Billete v. Deutsche Bank Nat'l Trust Co.
| Decision Date | 28 May 2013 |
| Docket Number | CIVIL NO. 13-00061 LEK-KSC |
| Parties | JOSEPH BILLETE; MARIVEL BILLETE, Plaintiffs, v. DEUTSCHE BANK NATIONAL TRUST COMPANY, NATIONAL BANKING ASSOCIATION AS TRUSTEE FOR GSR 2006-OA1; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC.; and DOES 1-50, Defendants. |
| Court | U.S. District Court — District of Hawaii |
On February 12, 2013, Defendant Deutsche Bank National Trust Company, National Banking Association as Trustee for GSR 2006-OA1 ("Deutsche Bank") filed its Motion to Dismiss Plaintiffs' Complaint Filed January 16, 2013 ("Motion"). [Dkt. no. 5.] Plaintiffs Joseph Billete and Marivel Billete ("Plaintiffs") filed their memorandum in opposition on April 22, 2013, and Deutsche Bank filed its reply on April 29, 2013. [Dkt. nos. 12, 13.] This matter came on for hearing on May 13, 2013. Appearing on behalf of Deutsche Bank was Sofia McGuire, Esq., and appearing on behalf of Plaintiffs was Katherine Holstead, Esq. After careful consideration of the Motion, supporting and opposing memoranda, and the arguments of counsel, Deutsche Bank'sMotion is HEREBY GRANTED IN PART AND DENIED IN PART for the reasons set forth below.
Plaintiffs purchased their residence, 91-1031 Makaike Street, Ewa Beach, Hawai'i ("the Property"), in 2000. [Complaint at ¶¶ 3, 7.] The Deed to the Property was recorded with the Land Court on July 31, 2000 as document number 2641152 on certificate of title number 559,260, and certificate of title number 559,741 was issued. [Id., Exh. 1.] In 2006, Plaintiffs obtained a $530,000.00 loan from HCL Finance, Inc. ("HCL"), secured by a Mortgage on the Property. The Mortgage was recorded with the Land Court on March 10, 2006 as document number 3402137 on certificate of title number 559,741. [Complaint, Exh. 2.] The Mortgage identifies Defendant Mortgage Electronic Registration Systems, Inc. ("MERS") as a separate corporation acting as a nominee for HCL and HCL's successors and assigns. [Id. at 1.]
The Complaint alleges that, on August 24, 2012, Deutsche Bank filed an ejectment action in a state district court, based upon a nonjudicial foreclosure of the Mortgage. [Complaint at ¶ 9.] Deutsche Bank's Quitclaim Deed Pursuant to Power of Sale ("Quitclaim Deed") to the Property was recorded with the Land Court on July 5, 2012 as document number T-8221287 on certificate number 559,741, and a new certificate of title was issued, number 1044607. [Id., Exh. 3.] Plaintiffs allege thatDeutsche Bank did not have standing either to foreclose on the Property or to sue for ejectment because it never properly obtained the Mortgage. Plaintiffs allege the Assignment in which MERS purportedly transferred ownership of the Mortgage from HCL to Deutsche Bank is ineffective because it was procured by fraud. The Assignment is dated August 6, 2009, and was recorded with the Land Court on September 16, 2012 as document number 3898298 on certificate number 559,741. [Complaint at ¶¶ 10-12; id., Exh. 4 (Assignment).] According to Plaintiffs, HCL informed them that it had sold Plaintiffs' loan to IMPAC Funding Corporation ("IMPAC"). [Complaint at ¶ 13; id., Exh. 5 ().] Thus, Plaintiffs allege that, at the time of the Assignment, HCL no longer had an ownership interest in Plaintiffs' loan and, in fact, the entity itself had already been dissolved. [Complaint at ¶¶ 14-15.] Further, Deutsche Bank's trust, to which the Assignment purportedly assigned Plaintiffs' loan ("the Trust"), closed by its own terms on August 24, 2006, and Plaintiffs allege that the Trust could not have accepted new assets in 2009. Plaintiffs allege that Deutsche Bank had no authority either to accept Plaintiffs' loan in 2009 or to foreclose upon the loan in 2012. [Id. at ¶¶ 17-18, 22.]
In addition, Plaintiffs assert that the foreclosure is void because the terms of their loan were predatory and becausethe manner in which the loan servicer, IndyMac Bank ("IndyMac"), abruptly increased Plaintiffs' monthly payments violated certain provisions of the loan documents. Plaintiffs claim that any default that they committed should be excused because it was the direct result of the lender's illegal acts. [Id. at ¶¶ 24-30.] Plaintiffs also allege that IndyMac's actions when Plaintiffs inquired about a loan modification constitute unfair and deceptive acts. [Id. at ¶ 31.]
Plaintiffs allege the following claims: wrongful foreclosure and wrongful ejectment against Deutsche Bank ("Count I");1 a claim for injunctive relief against Deutsche Bank ("Count II"); fraud against Deutsche Bank and MERS ("Count III"); breach of contract against Deutsche Bank ("Count IV"); and unfair and deceptive acts and practices ("UDAP") against Deutsche Bank and MERS ("Count V"). Plaintiffs seek the following relief: a declaratory judgment that the Assignment and all of the foreclosure documents are null and void; an order striking the Assignment and the foreclosure documents from the Land Court records; an injunction against Deutsche Bank and against any prior or subsequent trustee or agent of the Trust precluding theenforcement of either the mortgage loan or the foreclosure; actual and treble damages; attorneys' fees and costs; and any other appropriate relief.
In the instant Motion, Deutsche Bank characterizes Plaintiffs' Complaint as an effort to stall their inevitable ejectment from the Property, which Plaintiffs no longer own. Deutsche Bank emphasizes that it prevailed in the state district court ejectment action and that the state district court filed the Judgment for Possession and Writ of Possession on November 15, 2012. Further, on January 8, 2013, the state district court denied Plaintiffs' motion for reconsideration of its dispositive order denying Plaintiffs' motion to dismiss and granting Deutsche Bank's motion for summary judgment. Plaintiffs have appealed the state district court's rulings, and the appeal is currently pending before the Intermediate Court of Appeals ("ICA"). Deutsche Bank argues that the instant case is an attempt to relitigate the same defenses to the ejectment that the parties litigated in the state district court. [Mem. in Supp. of Motion at 1-2.]
Deutsche Bank contends that Plaintiffs' claims merely make general, unsupported legal conclusions that do not support liability by Deutsche Bank. Plaintiffs' claims of superior title are not plausible because the Land Court cancelled theCertificate of Title that reflected Plaintiffs as the registered owners of the Property and entered a new Certificate of Title setting forth Deutsche Bank as the registered owner.
Deutsche Bank urges this Court to give effect to the new Certificate of Title and to dismiss Plaintiffs' claims. [Mem. in Supp. of Motion at 4.] Deutsche Bank argues that, pursuant to Aames Funding Corp. v. Mores, 107 Hawai'i 95, 110 P.3d 1042 (2005), Lee v. HSBC Bank USA, 121 Hawai'i 287, 218 P.3d 775 (2009), and Haw. Rev. Stat. § 501-118, Plaintiffs cannot challenge the foreclosure of the Property because the Mortgagee's Affidavit of Foreclosure under Power of Sale ("Foreclosure Affidavit") has been recorded and the new Certificate of Title has been entered. [Id. at 6-8.] In addition, Deutsche Bank argues that Plaintiffs' quiet title claim and request for injunctive relief fail because Plaintiffs have not alleged, and cannot allege, that they have either paid off their mortgage loan or are able to tender the full amount. [Id. at 9.]
Deutsche Bank also argues that Plaintiffs' fraud and UDAP claims fail because Plaintiffs did not plead these claimswith particularity, and Plaintiffs expressly granted MERS the right to transfer the lender's interest. Further, Plaintiffs cannot overcome the controlling precedent rejecting these types of claims and recognizing MERS's power to act as the mortgagee. Deutsche Bank argues that the Assignment cannot be the product of fraud because there is no dispute that Plaintiffs executed the Mortgage, and the conveyance language in the Mortgage is clear. [Id. at 9-12.] Deutsche Bank emphasizes that Plaintiffs have not alleged any specific facts setting forth the alleged defect in the transfer of Plaintiffs' loan. The unsubstantiated allegation of fraud in the Assignment is not enough to invalidate the foreclosure. [Id. at 14.]
Deutsche Bank argues that, to the extent that Plaintiffs' claims are based on the alleged "failed securitization" of their loan, this district court and courts around the country have rejected similar claims on the ground that a borrower is neither a party to nor a third party beneficiary of a trust's Pooling and Servicing Agreement ("PSA"). In other words, a borrower/plaintiff lacks standing to challenge the securitization of the loan because he is not an investor in the loan trust. Securitization does not change the rights of, or the relationship between, the original parties to the loan, and there is nothing improper about the process of securitization, in and of itself. Deutsche Bank argues that, for the same reasons,all of Plaintiffs' claims based on the allegedly improper securitization fail. [Id. at 14-18.]
As to Plaintiffs' UDAP claim, Deutsche Bank argues that Plaintiffs failed to allege how Deutsche Bank violated Haw. Rev. Stat. Chapter 480 because Plaintiffs cannot show either how the Assignment was improper, that their title to the Property is superior to Deutsche Bank's, or that the Mortgage or the Assignment is otherwise unenforceable. Plaintiffs have not implicated Deutsche Bank in the alleged wrongdoing regarding predatory lending, loan origination, increased payments, and consideration for loan modification. Deutsche Bank therefore urges this Court to...
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