Teaupa v. U.S. Nat'l Bank N.A.

• Decision Date: 22 December 2011
• Docket Number: Civil No. 10–00727 JMS–BMK.
• Citation: 836 F.Supp.2d 1083
• Parties: Kuli TEAUPA, an individual, Salote Teaupa, an individual, Plaintiffs, v. U.S. NATIONAL BANK N.A., a Business Entity, form unknown; BNC Mortgage, Inc., a Business Entity, form unknown; Infinity Mortgage Company, a Business Entity, form unknown; Mortgage Electronic Registration Systems, a Business Entity, form unknown, Defendants.
• Court: U.S. District Court — District of Hawaii

836 F.Supp.2d 1083

Kuli TEAUPA, an individual, Salote Teaupa, an individual, Plaintiffs,

v.U.S. NATIONAL BANK N.A., a Business Entity, form unknown; BNC Mortgage, Inc., a Business Entity, form unknown; Infinity Mortgage Company, a Business Entity, form unknown; Mortgage Electronic Registration Systems, a Business Entity, form unknown, Defendants.

Civil No. 10–00727 JMS–BMK.

United States District Court,

D. Hawai‘i.

Dec. 22, 2011.

Kuli Teaupa, Kailua–Kona, HI, pro se.

Salote Teaupa, Kailua–Kona, HI, pro se.

Audrey Malia Yap, Bruce L. Lamon, Carol A. Eblen, Goodsill Anderson Quinn & Stifel LLLP, Honolulu, HI, for Defendants.

ORDER (1) GRANTING DEFENDANT U.S. NATIONAL BANK, N.A.'S MOTION FOR JUDGMENT ON THE PLEADINGS; (2) DENYING PLAINTIFFS' “MOTION TO EXTEND SETTLEMENT CONFERENCE AND TO AMEND COMPLAINT”; AND (3) REQUIRING PLAINTIFFS TO SHOW CAUSE WHY ACTION SHOULD NOT BE DISMISSED WITHOUT PREJUDICE AS TO NON–SERVED DEFENDANTS

J. MICHAEL SEABRIGHT, District Judge.

I. INTRODUCTION

On January 5, 2011, Plaintiffs Kuli Teaupa and Salote Teaupa (“Plaintiffs”), proceeding pro se, filed a Second Amended Complaint (“SAC”) against Defendants “U.S. National Bank N.A.” (which has appearedas “U.S. Bank, N.A., as Trustee for the Structured Asset Securities Corporation Mortgage Pass Through Certificates, Series 2006–BC5,” and which the court will refer to as “U.S. Bank”); BNC Mortgage, Inc. (“BNC”); Infinity Mortgage Company (“Infinity”); and Mortgage Electronic Registration Systems (“MERS”) (collectively, “Defendants”). The SAC alleges federal and state law claims stemming from an August 7, 2006 mortgage transaction concerning real property located at 74–5045 Huaala Street, Kailua–Kona, Hawaii (the “subject property”). It seeks declaratory and injunctive relief, as well as damages and rescission of the mortgage transaction.

U.S. Bank seeks dismissal of the SAC. No other party has appeared in the action. For the reasons set forth below, the court GRANTS the Motion. Given obvious deficiencies as to all Defendants, certain claims are dismissed as to all Defendants.¹

II. BACKGROUND

A. Factual Background

The court assumes the SAC's factual allegations are true for purposes of this Motion. See, e.g., Savage v. Glendale Union High Sch., 343 F.3d 1036, 1039 n. 1 (9th Cir.2003).

According to the SAC, on August 7, 2006, Plaintiffs entered into a loan repayment and security agreement with Infinity for $498,750. See Doc. No. 7, SAC ¶ 2. Plaintiffs' claims stem from the consummation of this transaction.

Plaintiffs assert, among other allegations, that (1) Infinity qualified Plaintiffs for a loan which it knew Plaintiffs were not qualified for and could not repay, and that Plaintiffs “should have been declined for this loan,” id. ¶¶ 22, 28, 35; (2) Infinity failed to “adequately underwrite this loan,” failed to verify that Plaintiffs could repay the loan, and “placed the Plaintiff[s] into a loan that had a significantly higher interest rate than what was qualified for,” id. ¶¶ 24, 26, 28; (3) the terms of the transaction were not clear and Defendants never explained the transaction to them, id. ¶ 30; (4) the loan was more expensive than alternative financing arrangements for which Plaintiffs could have qualified, id. ¶ 22; and (5) Defendants charged excessive or illegal fees. Id. ¶ 32.

Plaintiffs assert that Defendants failed to provide forms and disclosures required under the Truth in Lending Act (“TILA”), 15 U.S.C. § 1601 et seq.; the Equal Opportunity Credit Act; the “Fair Lending/Fair Debt Collection Act”; and the Real Estate Settlement Practices Act (“RESPA”), 12 U.S.C. § 2601 et seq.Id. ¶¶ 12, 14. Defendants allegedly “intentionally concealed the negative implications of the loan they were offering,” id. ¶ 19, and “failed to perform their due diligence in investigat[ing] the legal requirements that this loan should have been processed within.” Id. ¶ 21. The misconduct was such that Plaintiffs were sold “a deceptive loan product” and the acts of deception created an “illegal loan.” Id. ¶¶ 27, 28. Defendants' acts allegedly were in violation of federal and state law, including bad faith, breach of fiduciary duty, and unfair and deceptive trade practices.

Although unclear, it appears the Note and Mortgage for the subject property were assigned by Infinity to BNC. Thereafter, according to an Assignment of Mortgage recorded on August 31, 2007, MERS, “solely as nominee for BNC,” assigned the Mortgage to U.S. Bank on August 23, 2007. See Doc. No. 19–4, U.S. Bank Mot. Ex. B.² U.S. Bank then instituted judicial foreclosure proceedings against Plaintiffs on January 25, 2010 in the Circuit Court of the Third Circuit, State of Hawaii, and obtained a Foreclosure Judgment on November 16, 2010. See Doc. Nos. 19–5 & 19–6, U.S. Bank Mot. Exs. C & D. The property was purchased at auction by U.S. Bank on January 18, 2011. See Doc. No. 19–7, U.S. Bank Mot. Ex. E. It is unclear whether the sale has been confirmed in the state court, as Plaintiffs filed a Notice of Pendency of Action on January 5, 2011 in the current action. See Doc. No. 8.

B. Procedural Background

Plaintiffs filed suit on December 9, 2010. Doc. No. 1. The court dismissed the Complaint on December 10, 2010, with leave given to file an Amended Complaint. Doc. No. 4. An Amended Complaint was filed on December 22, 2010, which the court dismissed on December 27, 2010. Doc. No. 6. On January 5, 2011, Plaintiffs filed the SAC, which alleges twelve separate counts, entitled: (1) Declaratory Relief; (2) Injunctive Relief; (3) Contractual Breach of Implied Covenant of Good Faith and Fair Dealing; (4) Violations of TILA; (5) Violations of RESPA; (6) Rescission; (7) Unfair and Deceptive Acts and Practices (UDAP); (8) Breach of Fiduciary Duty; (9) “Unconscionability—UCC2–3202”; (10) Predatory Lending; (11) Quiet Title; and (12) “Lack of Standing; Improper Fictitious Entity.” Doc. No. 7. U.S. Bank filed an Answer on February 16, 2011. Doc. No. 9.

On September 27, 2011, U.S. Bank filed its Motion for Judgment on the Pleadings, Doc. No. 19, seeking dismissal of all counts. The Motion was originally set for hearing on December 12, 2011, and Plaintiffs were specifically notified that an Opposition was due by November 21, 2011. Doc. No. 21. Plaintiffs did not file an Opposition. On December 2, 2011, however, Plaintiffs filed a one-sentence document entitled “Motion and/or Request to Extend Settlement Confrence (sic) and to Amend Complain (sic),” stating that they requested an “extention (sic) [d]ue to family emergency which will take us out of the country” from December 5, 2011 to January 9, 2012. Doc. No. 23. The Motions are appropriate for decision without a hearing under Local Rule 7.2(d).

III. STANDARDS OF REVIEW

A. Rule 12(b)(6)

Federal Rule of Civil Procedure 12(b)(6) permits a motion to dismiss a claim for “failure to state a claim upon which relief can be granted[.]”

“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, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (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 containedin the complaint—“is inapplicable to legal conclusions.” Iqbal, 129 S.Ct. at 1949. 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, 127 S.Ct. 1955). 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, 127 S.Ct. 1955). 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 1950.

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).

The court may dismiss a complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) on its own motion. See Omar v. Sea–Land Serv., Inc., 813 F.2d 986, 991 (9th Cir.1987) (“A trial court may dismiss a claim sua sponte under [Rule] 12(b)(6). Such a dismissal may be made without notice where the claimant cannot possibly win relief.”); Ricotta v. California, 4 F.Supp.2d 961, 968 n. 7 (S.D.Cal.1998) (“The Court can dismiss a claim sua sponte for a Defendant who has not filed a motion to dismiss under Fed.R.Civ.P. 12(b)(6).”); see also Baker v. Dir., U.S. Parole Comm'n, 916 F.2d 725, 727 (D.C.Cir.1990) (holding that a district court may dismiss cases sua sponte pursuant to Rule 12(b)(6) without notice where plaintiff could not prevail on complaint as alleged).

B. 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 by15 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 are multiple defendants, Plaintiffs cannot “lump...