Dias v. Fed. Nat'l Mortg. Ass'n

990 F.Supp.2d 1042

Bridget DIAS, an individual, Plaintiff,

v.FEDERAL NATIONAL MORTGAGE ASSOCIATION, a congressionally-chartered government-sponsored entity of the United States; FNMA Act/Act Defaults & Picons, an assumed business name of Federal Mortgage Association other Federal National Mortgage Association; Bank of America, N.A., a National Banking Association formerly known as Countrywide Bank FSB; BAC Home Loan Servicing, LP, formerly known as Countrywide Home Loan, Inc.; Does 1–100, inclusive; Federal Housing Finance Agency, in its capacity as conservator of Federal National Mortgage Association; Bank of America Corporation, Defendants.

Civil No. 12–00394 DKW KSC.

United States District Court, D. Hawai‘i.

Dec. 31, 2013.

Paul J. Sulla, Jr., Hilo, HI, for Plaintiff.

Patricia J. McHenry, Cades Schutte, Honolulu, HI, for Defendants.

ORDER (1) GRANTING DEFENDANT FEDERAL HOUSING FINANCE AGENCY'S MOTION TO DISMISS AMENDED COMPLAINT, AND (2) GRANTING IN PART AND DENYING IN PART REMAINING DEFENDANTS' MOTION TO DISMISS AMENDED COMPLAINT

DERRICK K. WATSON, District Judge.

INTRODUCTION

Before the Court are the following motions: (1) Defendant Federal Housing FinanceAgency's (“FHFA”) Motion to Dismiss the Amended Complaint, filed on May 31, 2013 (“FHFA Motion”); and (2) Defendants Federal National Mortgage Association (“Fannie Mae”), Bank of America, N.A. formerly known as Countrywide Bank, FSB and successor by merger to BAC Home Loans Servicing, LP formerly known as Countrywide Home Loans Servicing, LP (“BANA”), and Bank of America Corporation's (“BAC”) Motion to Dismiss Amended Complaint, filed on May 31, 2013 (“Fannie Mae Motion”). The Court held a hearing on the motions on September 20, 2013. After careful consideration of the supporting and opposing memoranda, the arguments of counsel, and the relevant legal authority, the FHFA Motion is GRANTED and the Fannie Mae Motion is GRANTED IN PART and DENIED IN PART. Plaintiff is permitted leave to amend specific claims as set forth in this Order.

BACKGROUND

Plaintiff Bridget Dias filed her Amended Complaint to Set Aside Foreclosure Sale and Monetary Damages on October 23, 2012 (“Complaint”). The Complaint alleges that, on December 9, 2005, Plaintiff entered into a transaction with Quicken Loans, Inc. (“Quicken”), obtaining a $282,400 loan secured by a mortgage on her principal residence at 206B East Kinai Place, Hilo, Hawaii 96720 (the “property”). According to Plaintiff, documentation of the loan in favor of Quicken utilized an FNMA form (“First Loan”). Complaint ¶ 13. On February 1, 2006, Plaintiff received notice of the assignment of servicing rights to her loan to Countrywide Home Loans, Inc. (“Countrywide”). Id. On October 13, 2006, Plaintiff entered into a second loan repayment and security agreement on the property with Countrywide (“Second Loan”). Complaint ¶ 14. Plaintiff made all mortgage payments through January 2009. Complaint ¶ 22. Plaintiff modified the Second Loan with BAC in June 2009. Complaint ¶ 23.

According to Plaintiff, in July 2008, BANA acquired Countrywide, which thereafter changed its name to BAC. BAC is the current servicer of the First Loan. Plaintiff entered into a Forbearance Agreement with BAC beginning September 1, 2009, calling for a deferral period payment for six months, ending February 1, 2010. The Complaint alleges that, under the Forbearance Agreement, BAC promised to suspend any scheduled foreclosure sale provided Plaintiff continued to meet her payment obligations and “at the end of the trial period she would receive a modification of her loan.” Complaint ¶ 24. Plaintiff claims that although she complied with the Forbearance Agreement, BAC, on December 9, 2009, sent her a Notice of Mortgagee's Intention to Foreclose Under Power of Sale (“NOI”), and recorded a copy with the State of Hawaii Bureau of Conveyances as Doc. No. 2009–185138, which had the effect of clouding her title and setting a foreclosure date of February 1, 2010. Complaint ¶ 25.

Plaintiff attempted to negotiate a loan modification with BAC, but was told that she had to wait until the end of the Forbearance Agreement period on or after February 1, 2010. Complaint ¶ 26. On May 22, 2010, she was told by “someone at BAC” that her loan modification application had been lost, and that she would have to apply again. Complaint ¶ 29. Plaintiff tried several times during the summer of 2010 to obtain a loan modification from BAC, without success and with poor communication from BAC. 2 Complaint ¶¶ 30–33. On August 2, 2010, Plaintiff received a certified mail notice that a foreclosure sale of the property was set for that same day. Complaint ¶ 34. According to Plaintiff, BAC conducted the foreclosure sale and Fannie Mae was the only bidder on the property. Complaint ¶ 35. Plaintiff alleges that BANA then sent her a letter in 2011 attempting to collect on the First Loan, even though Plaintiff had already lost the property to foreclosure. Complaint ¶ 37.

Plaintiff argues that Defendants had a duty under the Home Affordable Modification Program (“HAMP”) to provide fair loan mitigation prior to holding a foreclosure sale. Complaint ¶¶ 38–54. She also claims that the non judicial foreclosure conducted by BAC was defective because it did not comply with Hawaii Revised Statutes (“HRS”) § 667–5–10. Complaint ¶¶ 55–57. Last, Plaintiff alleges that BANA and BAC do not hold the Note and lack legal standing to foreclose. Complaint ¶¶ 58–61.

Plaintiff's Complaint alleges the following causes of action: (1) violation of HRS Chapter 667 based on lack of standing to foreclose against BAC, BANA, and Fannie Mae; (2) violation of HRS § 667–5 for failure to provide public announcement of continued date of foreclosure and to follow initial terms of sale against BAC, BANA, and Fannie Mae; (3) violation of “Unfair Debt Collection Practices Act” against BAC and BANA for failure to cease collection efforts after debt was paid in full; (4) another violation of “Unfair Debt Collection Practices Act” for collecting a debt they do not own against BAC and BANA; (5) breach of HAMP contract, against BAC and Fannie Mae; (6) unfair and deceptive acts and practices (“UDAP”) in violation of HRS § 480–2 against BAC and Fannie Mae; (7) wrongful foreclosure against BAC and BANA; (8) promissory estoppel against BAC; (9) fraudulent misrepresentation against BAC and BANA; (10) violation of constitutional right of due process against Fannie Mae and FHFA; and (11) quiet title against any Defendant claiming an interest in the property.¹ Plaintiff requests the following relief: set aside the August 2, 2010 foreclosure sale and transfer of title; determine that Plaintiff is the prevailing party; and award damages and costs, as well as treble damages, punitive damages, attorneys' fees and costs.

Defendants seek the dismissal of all claims. The Fannie Mae Motion notes that the recorded Mortgagee's Affidavit of Foreclosure Under Power of Sale (“Affidavit of Foreclosure”) states that each postponement of the sale was publicly announced “by crying out the postponement date at the time and place of the scheduled auction,” and that BANA, not Fannie Mae, purchased the property. Mem. in Supp. of Fannie Mae Motion at 6 (quoting Decl. of Counsel, Ex. 3). Defendants note that Plaintiff alleges that she entered into a Forbearance Agreement with BANA on September 1, 2009, but does not allege that the Forbearance Agreement required Defendants to provide Plaintiff with a HAMP loan modification. Rather, Plaintiff claimed that she was told that she could not apply for a HAMP loan modification until after the forbearance plan ended on February 1, 2010. Fannie Mae Reply at 8 n. 4 (citing Complaint ¶ 26).

FHFA moves to dismiss with prejudice Plaintiff's lone constitutional claim, on the ground that Fannie Mae is not a government actor. Rather, it asserts that Fannie Mae is a private corporation presently in the temporary conservatorship of the FHFA.

STANDARD OF REVIEW

Defendants bring their respective motions pursuant to Federal Rule of Civil Procedure 12(b)(6). Rule 12(b)(6) permits a motion to dismiss for failure to state a claim upon which relief can be granted. Pursuant to Ashcroft v. Iqbal, “[t]o 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.’ ” 556 U.S. 662, 678, 129 S.Ct. 1937, 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)). “[T]he tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions.” Id. 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 constitute a short and plain statement of the claim showing that the pleader is entitled to relief as required by Rule 8(a)(2). Id. at 679, 129 S.Ct. 1937.

DISCUSSION

I. Fannie Mae Motion

A. HRS Chapter 667 Claims (Counts 1 and 2)

Plaintiff's first two counts allege violations of HRS § 667–5. The statute provides in pertinent part:

(a) When a power of sale is contained in a mortgage, and where the mortgagee, the mortgagee's successor in interest, or any person authorized by the power to act in the premises, desires to foreclose under power of sale upon breach of a condition of the mortgage, the mortgagee, successor, or person shall be represented by an attorney who is licensed to practice law in the State and is physically located in the State. The...