Valencia v. Carrington Mortg. Servs., LLC
| Decision Date | 25 June 2013 |
| Docket Number | CIVIL 10-00558 LEK-RLP |
| Parties | WANDA VALENCIA and MARK VALENCIA, Plaintiffs, v. CARRINGTON MORTGAGE SERVICES, LLC; DEUTSCHE BANK NATIONAL TRUST COMPANY, AS TRUSTEE, FOR CARRINGTON HOME EQUITY LOAN TRUST, SERIES 2005-NC4 ASSET BACKED PASS THROUGH CERTIFICATES; EQUITY FINANCIAL GROUP OF HONOLULU, LLC; EQUITY FINANCIAL LLC; BRAD B. KANESHIRO, Defendants. |
| Court | U.S. District Court — District of Hawaii |
AMENDED ORDER (1) GRANTING IN PART AND DENYING
IN PART DEFENDANTS EQUITY FINANCIAL GROUP
OF HONOLULU, LLC, EQUITY FINANCIAL, LLC AND
BRAD B. KANESHIRO'S OBJECTIONS TO THE MAGISTRATE
On May 9, 2013, the magistrate judge filed his Findings and Recommendation to (1) Grant in Part and Deny in Part Defendants Equity Financial Group of Honolulu, LLC, Equity Financial, LLC and Brad B. Kaneshiro's ("Equity Defendants") Motion for Attorneys' Fees; and (2) Grant in Part and Deny inPart Defendant Carrington Mortgage Services, LLC ("CMS") and Deutsche Bank National Trust Company's ("DBNT") (collectively, "Bank Defendants")1 Motion for Award of Attorneys' Fees ("F&R"). [Dkt. no. 207.] On May 20, 2013, the Equity Defendants filed objections to the F&R ("Equity Defendants' Objections"). [Dkt. no. 211.] On May 22, 2013, pro se Plaintiffs Wanda and Mark Valencia ("Plaintiffs") filed their objections to the F&R ("Plaintiffs' Objections"). [Dkt. no. 212.] On May 28, 2013, the Bank Defendants filed their cross-objections to Plaintiffs' Objections ("Cross-Objections"). [Dkt. no. 213.] The Court finds these matters suitable for disposition without a hearing pursuant to Rules LR7.2(d) and LR74.2 of the Local Rules of Practice of the United States District Court for the District of Hawai'i ("Local Rules"). After careful consideration of the parties' submissions and the relevant legal authority, the Court HEREBY GRANTS IN PART AND DENIES IN PART the Equity Defendant's Objections, DENIES Plaintiffs' Objections, DENIES the Bank Defendants' Cross-Objections, and MODIFIES the magistrate judge's F&R for the reasons set forth below.
On January 29, 2013, this Court issued its Order Granting (1) Defendants Carrington Mortgage Services, LLC andDeutsche Bank National Trust Company's Motion to Dismiss the Fourth Amended Complaint Filed 9/14/12 as Against Movants; and (2) Defendants Equity Financial Group of Honolulu, LLC, Equity Financial, LLC, and Brad B. Kaneshiro's Motion to Dismiss the Fourth Amended Complaint Filed on September 14, 2012 ("1/29/13 Order"). Valencia v. Carrington Mortg. Servs., LLC, 2013 WL 375643 (D. Hawai'i Jan. 29, 2013). In the 1/29/13 Order, the Court granted Defendants' unopposed motions to dismiss the Fourth Amended Complaint with prejudice, finding that Plaintiffs had failed to cure the many defects in their complaint, despite having numerous opportunities to do so. Id. The Court issued judgment in favor of Defendants on January 30, 2013. [Dkt. no. 169.]
On February 12, 2013, the Equity Defendants filed a Motion for Attorneys' Fees ("Equity Defendants' Motion"). [Dkt. no. 170.] The Equity Defendants requested the following fees, pursuant to Haw. Rev. Stat. § 607-142 :
+---------------------------------------------+
¦Name ¦Hours ¦Rate ¦Total ¦
+----------------+-------+-------+------------¦
¦Peter T. Kashiwa¦2.6 ¦$350.00¦$910.00 ¦
+----------------+-------+-------+------------¦
¦Regan M. Iwao ¦8.4 ¦$275.00¦$2,310.00 ¦
+----------------+-------+-------+------------¦
¦Audrey M. Yap ¦168.9 ¦$200.00¦$33,780.00 ¦
+--------------------------------+------------¦
¦Tax (4.71%) ¦$1,742.71 ¦
+--------------------------------+------------¦
¦Total ¦$38,742.71 ¦
+---------------------------------------------+
The magistrate judge found and recommended that only Count I of the Fourth Amended Complaint (Breach of Contract/Breach of Covenant of Good Faith and Fair Dealing) is a claim in the nature of assumpsit, as required for an award of fees pursuant to Haw. Rev. Stat. § 607-14. [F&R at 7.] The magistrate judge further found and recommended that the non-assumpsit claims asserted against the Equity Defendants were not inextricably linked to or derivative of the breach of contract claim and therefore found that apportionment of the fees claimed between assumpsit and non-assumpsit claims was practicable and necessary. The magistrate judge also found that the breach of contract claim was not raised until the filing of the Third Amended Complaint on May 30, 2012 and, therefore, no fees incurred prior to that date were recoverable. [Id. at 12.] Themagistrate judge therefore determined that the fees award should be reduced by eighty percent to account for work completed on claims for which the Equity Defendants are not entitled to attorneys' fees. [Id.]
The magistrate judge found the hourly rates requested for Audrey M. Yap, Esq. ($200), and Regan M. Iwao, Esq. ($275) to be slightly excessive and therefore reduced them to $175 for Ms. Yap, a fifth-year litigation associate, and $250 for Mr. Iwao, a partner with twelve years of litigation experience. [Id. at 24-25.] Plaintiffs did not challenge the hours requested by the Equity Defendants, and the magistrate judge found that the time requested for work performed after May 30, 2012 was reasonably and necessarily incurred. [Id. at 26.] The magistrate judge found and recommended that the Equity Defendants be awarded the following fees:
+---------------------------------------------------------+
¦Name ¦Hours ¦Rate ¦Total ¦
+---------------------+-----------+-----------+-----------¦
¦Audrey M. Yap ¦75.0 ¦$175.00 ¦$13,125.00 ¦
+---------------------+-----------+-----------+-----------¦
¦Regan M. Iwao ¦1.9 ¦$250.00 ¦$475.00 ¦
+---------------------------------------------+-----------¦
¦Subtotal ¦$13,600.00 ¦
+---------------------------------------------+-----------¦
¦Subtotal with 80% reduction for apportionment¦$2,720.00 ¦
+---------------------------------------------+-----------¦
¦Tax (4.71%) ¦$128.11 ¦
+---------------------------------------------+-----------¦
¦Total ¦$2,848.11 ¦
+---------------------------------------------------------+
[Id. at 26.]
On February 13, 2013, the Bank Defendants filed aMotion for Award of Attorneys' Fees ("Bank Defendants' Motion"). [Dkt. no. 173.] The Bank Defendants requested the following attorneys' fees for work performed by their counsel:
+---------------------------------------------+
¦Name ¦Hours ¦Rate ¦Total ¦
+---------------+-------+-------+-------------¦
¦Cheryl Nakamura¦216.3 ¦$250.00¦$54,075.00 ¦
+---------------+-------+-------+-------------¦
¦Jason M. Tani ¦47.6 ¦$235.00¦$11,186.00 ¦
+---------------+-------+-------+-------------¦
¦Lisa Strandtman¦237.7 ¦$230.00¦$54,671.003 ¦
+---------------+-------+-------+-------------¦
¦Shimpei Oki ¦41.1 ¦$140.00¦$5,754.00 ¦
+-------------------------------+-------------¦
¦Total ¦$125,686.00 ¦
+---------------------------------------------+
The Bank Defendants conceded in their motion for attorneys' fees that the Third Amended Complaint and the Fourth Amended Complaint did not assert any claims in the nature of assumpsit against them, but argued that they were nonetheless entitled to fees pursuant to Haw. Rev. Stat. § 607-14 because the relief requested by Plaintiffs transformed the entire action against them into one in the nature of assumpsit or, in the alternative, the assumpsit and non-assumpsit claims are inextricably linked. The magistrate judge found that the requested relief did not transform the action into one in the nature of assumpsit, as Plaintiffs' primary allegations againstthe Bank Defendants were that they violated statutory duties and lacked authority to foreclose because they had no relationship to the note and mortgage. [Id. at 14-16.]
The magistrate judge found that the Bank Defendants prevailed on one assumpsit claim (breach of contract/breach of the covenant of good faith and fair dealing as to the servicer participation agreement between CMS and the United States government) asserted in the First and Second Amended Complaints when, on July 31, 2012, this district court denied Plaintiffs' motion for reconsideration of this district court's order granting summary judgment in favor of the Bank Defendants on that claim. [Dkt. no. 152.] The magistrate judge determined that the Bank Defendants were therefore entitled to the portion of their fees incurred prior to July 31, 2012. The magistrate judge further found and recommended that apportionment was practicable and necessary, and that the Bank Defendants could only recover for that portion of attorneys' fees incurred in defense of the assumpsit claim. [F&R at 17-19.] The magistrate judge therefore determined that the fees award should be reduced by ninety percent to account for work completed on claims for which the Bank Defendants are not entitled to attorneys' fees. [Id.]
The magistrate judge rejected the Bank Defendants' argument that they are entitled to attorneys' fees pursuant to Haw. Rev. Stat. § 607-14 in accordance with the provisions in themortgage and note, which reference the lender's ability to recover attorneys' fees, finding that the underlying action was not based on the mortgage and note as contracts. [Id. at 20.]
Plaintiffs did not challenge the hourly rates requested,...
To continue reading
Request your trial