Tedder v. Deutsche Bank Nat'l Trust Co.

863 F.Supp.2d 1020

Cherie Diane TEDDER, Plaintiff,

v.DEUTSCHE BANK NATIONAL TRUST COMPANY as Trustee of the Residential Asset Securitization Trust 2007–A8, Mortgage Pass–Through Certificates, Series 2007–H, Under the Pooling and Servicing Agreement Dated June 1, 2007; and One West Bank, FSB dba Indymac Mortgage Services, Defendants.

Civil No. 11–00083 LEK–KSC.

United States District Court, D. Hawaii‘i.

March 23, 2012.

Christian P. Porter, Porter McGuire Kiakona & Chow, LLP, Rebecca A. Szucs, Tom Quitiquit Chee Watts & Yamamoto, LLP, John Harris Paer, Honolulu, HI, for Plaintiff.

Charles R. Prather, Sofia Malina Hirosane, RCO Hawaii, LLLC, Peter T. Stone, Dubin Law Offices, Honolulu, HI, for Defendants.

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO DISMISS FIRST AMENDED COMPLAINT

LESLIE E. KOBAYASHI, District Judge.

Before the Court is Defendants Deutsche Bank National Trust Company, as Trustee (“Deutsche Bank”) and OneWest Bank, FSB's (“OneWest,” collectively “Defendants”) Motion to Dismiss First Amended Complaint (“Motion”), filed December 9, 2011. Plaintiff Cherie Diane Tedder (“Plaintiff” or “Tedder”) filed her memorandum in opposition on February 17, 2012, and Defendants filed their reply on February 27, 2012. This matter came on for hearing on March 12, 2012. Appearing on behalf of Defendants was Charles Prather, Esq., and appearing on behalf of Plaintiff was John Harris Paer, Esq. After careful consideration of the Motion, supporting and opposing memoranda, and the arguments of counsel, Defendants' Motion is HEREBY GRANTED IN PART AND DENIED IN PART for the reasons set forth below.

BACKGROUND

Plaintiff alleges that on May 24, 2007, she entered into a loan transaction with non-party Loan Network, LLC to refinance her first mortgage on her property located at 7762 Kalohelani Place, Honolulu, Hawai‘i (“the Property”). [First Amended Complaint at ¶ 10; Exh. A (5/22/07 Loan Network, LLC Disclosure Statement).] According to Plaintiff, she received copies of some, but not all, loan documents at closing, including the Truth in Lending Act (“TILA”) Disclosure Statement, the Notice of Right to Cancel, and the HUD–1 Final Settlement Statement. [ Id. at ¶ 12.¹] She states that Deutsche Bank is the present holder of the mortgage and note on the Property related to this transaction, and that OneWest (doing business as IndyMac Mortgage Services (“IndyMac”)) is servicing the loan and collecting payments on behalf of Deutsche Bank. Plaintiff states that Defendants acquired the loan and servicing rights after the loan was already in default. [ Id. at ¶¶ 13, 16.]

She alleges that, beginning in July 2009, she sought loan modification of her first mortgage through IndyMac, and on March 23, 2010, rescinded the loan by letter and sought new terms. IndyMac informed her in an October 18, 2010 letter that her loan modification was denied because she failed to submit requested documentation. Plaintiff, however, alleges that she timely submitted all requested documentation. IndyMac requested that she resubmit the entire loan modification packet, which Plaintiff says she did. Plaintiff's counsel sent a qualified written request to IndyMac on November 22, 2010, and, on December 14, 2010, IndyMac approved a Forbearance Agreement, and Plaintiff signed and returned the required paperwork. Plaintiff states that she has made all payments required by the Forbearance Agreement. [ Id. at ¶¶ 17–27.]

Sometime in December 2010, Plaintiff received notice that the Property would be sold pursuant to a non-judicial foreclosure sale. Plaintiff's counsel contacted Deutsche Bank's counsel during December 2010 and January 2011 to confirm that the foreclosure auction would be cancelled. On February 17, 2011, the Court granted Plaintiff's Motion for Temporary Restraining Order, and the parties subsequently agreed to an injunction to be in effect for the duration of the matter, under which Defendants would not proceed with any foreclosure actions. [ Id. at ¶¶ 28–42.]

Plaintiff claims that Defendants continued to threaten that the foreclosure sale will go forward, while she continued to make all required payments and seek loan modification. On November 2, 2011, Defendants' counsel notified Plaintiff's counsel that the modification request had been denied. [ Id. at ¶¶ 45–49.]

Plaintiff filed her First Amended Complaint against Defendants on November 15, 2011, alleging the following ten causes of action: (1) violation of Haw.Rev.Stat. Chapter 480 (Count I); (2) breach of fiduciary duty (Count II); (3) fraud and misrepresentation (Count III); (4) violation of the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. §§ 1692c-g (Count IV); (5) violation of the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. § 2605 (Count V); (6) violation TILA, 15 U.S.C. §§ 1635–40 (Count VI); (7) negligence (Count VII); (8) breach of contract (Count VIII); (9) breach of duty of good faith and fair dealing (Count IX), and; (10) promissory estoppel (Count X).

I. Defendants' Motion

Defendants ask the Court to dismiss the First Amended Complaint because Plaintiff fails to state a claim and fails to plead her fraud claims with particularity. They assert that this action is solely aimed at stalling foreclosure of the Property and forcing a loan modification. [Mem. in Supp. of Motion at 2.]

A. Count I—Haw.Rev.Stat. Chapter 480

Plaintiff alleges that Defendants committed unfair and deceptive acts or practices (“UDAP”) by violating various TILA provisions. Defendants argue that this claim cannot stand because TILA preempts Haw.Rev.Stat. § 480–2 based on alleged TILA violations. [ Id. at 4 (citing Enriquez v. Countrywide Home Loans, FSB, 814 F.Supp.2d 1042 (D.Hawai'i 2011)).]

Second, Defendants argue that its failure to modify Plaintiff's loan does not state a UDAP claim. [ Id. (citing cases).] Third, Defendants assert that Plaintiff cannot state a private right of action arising out of the Home Affordable Modification Program (“HAMP”). [ Id. at 4–5 (citing Lucia v. Wells Fargo Bank, N.A., 798 F.Supp.2d 1059, 1066–67 (N.D.Cal.2011)).]

B. Count II—Breach of Fiduciary Duty

Defendants argue that this count must be dismissed because Defendants did not owe Plaintiff a fiduciary duty as her lender, and Plaintiff has not demonstrated anything more than an “arms-length business relationship” existed between herself and Defendants. [ Id. at 5–6.]

C. Count III—Fraud and Misrepresentation

First, Defendants argue that Plaintiff's fraud and misrepresentation claim is based on future events—promises of a potential loan modification at some point in the future—and that there is no indication that there was any intent on the part of Defendants not to fulfill any alleged promises regarding loan modification. [ Id. at 6.]

Second, Defendants argue that Plaintiff failed to demonstrate that her fraud claims are plausible because she cannot satisfy the “who, what, when, where and how” test or at least “plead enough facts to raise a reasonable expectation that discovery would reveal evidence of such a misrepresentation.” [ Id. at 7.]

Finally, Defendants argue that Plaintiff has not shown that she relied on any of the alleged representations to her detriment. Defendants have not foreclosed on the Property and Plaintiff is still in possession. [ Id.]

D. Count IV—FDCPA

As to Plaintiff's FDCPA claim, Defendant argues that activities undertaken in connection with a non-judicial foreclosure do not fall under the purview of the FDCPA, and that this claim should be dismissed with prejudice. [ Id. at 7–8 (citing Long v. Deutsche Bank Nat. Trust Co., 2011 WL 5079586, at *4 (D.Hawai'i Oct. 24, 2011)).]

E. Count V—RESPA

Plaintiff claims that Defendants failed to respond to her attorney's Qualified Written Request (“QWR”) and therefore violated RESPA. Defendants note that Plaintiff does not cite a specific provision within RESPA, so they are left to assume that Plaintiff is alleging a violation of 12 U.S.C. § 2605(e)(2), which fails here, because of Plaintiff's failure to allege damages. Defendantsargue that Plaintiff must demonstrate how she has been damaged, and her failure to plead damages with regard to her RESPA claim warrants dismissal with prejudice. [ Id. at 9.]

F. Count VI—TILA

Plaintiff alleges that Defendants violated TILA by failing to disclose or improperly disclosing certain terms regarding the note and mortgage. Defendants argue that Plaintiff's damages claims are barred by the applicable statute of limitations because the loan transaction occurred in May of 2007, and Plaintiff should have filed any and all claims pertaining to the disclosure made at the time of the loan closing within a year of closing pursuant to 15 U.S.C. § 1640(e). To the extent Plaintiff seeks rescission, such a claim is time-barred as well because it was not brought within three years pursuant to 15 U.S.C. § 1635(f). [ Id. at 9.]

G. Count VII—Negligence

Defendants assert that Plaintiff's negligence claims appear to relate to both the loan origination and loan modification process. With respect to loan origination, they argue that she fails to state a claim because lenders do not owe borrowers a duty of care sounding in negligence. [ Id. at 9–10 (citing Caraang v. PNC Mortg., 795 F.Supp.2d 1098, 1122–23 (D.Hawai'i 2011)).] To the extent her claims relate to loan modification, Defendants argue they should be dismissed because no private right of action exists under HAMP. [ Id. at 10.]

H. Count VIII–Breach of Contract

Defendants note that Plaintiff alleges that they breached two separate agreements, but does not identify them specifically in the First Amended Complaint. They argue that Plaintiff must cite the contractual provisions allegedly violated, and cannot make generalized allegations of a contractual breach. To the extent Plaintiff claims that Defendants breached the terms of the Forbearance Agreement, they argue that the recording of a Notice of Mortgagee's Intention to Foreclose...