Viernes v. Executive Mortg., Inc.

372 F.Supp.2d 576

Samuel Laureano VIERNES and Imelda Legaspi Viernes, Plaintiffs, v. EXECUTIVE MORTGAGE, INC; Argent Mortgage Company, LLC; Ameriquest Mortgage Company; and Lydia Pascual, as an individual, Defendants.

No. CIV. 04-00212ACKLEK.

United States District Court, D. Hawai'i.

October 13, 2004.

Michael G.M. Ostendorp, Honolulu, HI, for Samuel Laureano Viernes, Imelda Legaspi Viernes, plaintiffs.

Donna H. Kalama, Goodsill Anderson Quinn & Stifel LLLP, Michiro Iwanaga, Mary L. Lucasse, Burke McPheeters Bordner & Estes, Andrew D. Stewart, Koshiba Agena & Kubota, Pauahi Tower, Michiro Iwanaga, Sakai Iwananga Sutton Law Group, Carol A. Eblen, Goodsill Anderson Quinn & Stifel LLLP, Honolulu, HI, for Executive Mortgage Inc., Argent Mortgage Company, LLC, Ameriquest Mortgage Company, Lydia Pascual, as an individual, defendants.

ORDER GRANTING DEFENDANTS EXECUTIVE MORTGAGE AND LYDIA PASCUAL'S MOTION FOR SUMMARY JUDGMENT AND DENYING THEIR MOTION TO DISMISS

KAY, District Judge.

BACKGROUND

In 2003, Plaintiffs Samuel Laureano Viernes and Imelda Legaspi Viernes sought to refinance the mortgage(s) on their home in Waipahu, Hawaii. See Defendants' Concise Statement of Fact at 2; Plaintiffs' Concise Statement of Fact at 1. Plaintiffs used the services of Defendant Executive Mortgage, Inc. ("Executive Mortgage"), a mortgage broker, to find a lender and obtain a new mortgage. See Defendants' Concise Statement of Fact at 2; Plaintiffs' Concise Statement of Fact at 1. Defendant Lydia Pascual is the president of Executive Mortgage. See Defendants' Concise Statement of Fact at 2.

Defendant Argent Mortgage Company, LLC ("Argent Mortgage") approved Plaintiffs' mortgage application; Plaintiffs signed mortgage papers to that effect, naming Argent Mortgage as the lender. See Defendants' Concise Statement of Fact at 2-5; Plaintiffs' Concise Statement of Fact at 3. Plaintiffs allege that Executive Mortgage made misrepresentations regarding the mortgage Plaintiffs were receiving from Argent Mortgage, and allege that required loan disclosures were not properly made to Plaintiffs. Plaintiffs subsequently sought to cancel the mortgage with Argent Mortgage but apparently their request was disallowed. See Defendants' Concise Statement of Fact at 5; Plaintiffs' Concise Statement of Fact at 4-5.

On April 2, 2004, Plaintiffs filed a Complaint against Executive Mortgage, Ms. Pascual, Argent Mortgage, and Ameriquest Mortgage Company, alleging (1) violation of the federal Consumer Credit Protection Act, (2) fraud, (3) intentional infliction of emotional distress, (4) deceptive and unfair trade practices, (5) breach of fiduciary duty, and (6) punitive damages.

On August 6, 2004, Defendants Executive Mortgage and Ms. Pascual filed a Motion for Summary Judgment and to Dismiss, seeking summary judgment on the federal Consumer Credit Protection Act claim and dismissal of all remaining claims. On September 20, 2004, Plaintiffs filed an Opposition. On October 1, 2004, Defendants Executive Mortgage and Ms. Pascual filed a Reply to the Opposition. Plaintiffs and Defendants Executive Mortgage and Ms. Pascual also filed concise statements of fact. On September 24, 2004, Defendants Argent Mortgage and Ameriquest Mortgage filed a statement of no position as to the Motion.¹ A hearing was held on October 12, 2004.

STANDARD

I. Standard for Motion for Summary Judgment

The purpose of summary judgment is to identify and dispose of factually unsupported claims and defenses. See Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Summary judgment is therefore appropriate when the "pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law."² Fed.R.Civ.P. 56(c).

"A fact is `material' when, under the governing substantive law, it could affect the outcome of the case. A genuine issue of material fact arises if `the evidence is such that a reasonable jury could return a verdict for the nonmoving party.'"³ Thrifty Oil Co. v. Bank of Am. Nat'l Trust & Sav. Ass'n, 310 F.3d 1188, 1194 (9th Cir.2002) (quoting Union Sch. Dist. v. Smith, 15 F.3d 1519, 1523 (9th Cir.1994)) (internal citations omitted). Conversely, where the evidence "could not lead a rational trier of fact to find for the nonmoving party, there is no `genuine issue for trial.'" Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (quoting First Nat'l Bank v. Cities Serv. Co., 391 U.S. 253, 289, 88 S.Ct. 1575, 20 L.Ed.2d 569 (1968)).

The moving party has the burden of persuading the Court as to the absence of a genuine issue of material fact. Celotex, 477 U.S. at 323, 106 S.Ct. 2548. The moving party may do so with affirmative evidence or by "`showing' — that is pointing out to the district court — that there is an absence of evidence to support the nonmoving party's case." Id. at 325, 106 S.Ct. 2548. All evidence and reasonable inferences drawn therefrom are considered in the light most favorable to the nonmoving party. See, e.g., T.W. Elec. Serv. v. Pac. Elec. Contractors Ass'n, 809 F.2d 626, 630-31 (9th Cir.1987). So, too, the Court's role is not to make credibility assessments. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Accordingly, if "reasonable minds could differ as to the import of the evidence," summary judgment will be denied. Id. at 250-51, 106 S.Ct. 2505.

Once the moving party satisfies its burden, however, the nonmoving party cannot simply rest on the pleadings or argue that any disagreement or "metaphysical doubt" about a material issue of fact precludes summary judgment. See Celotex, 477 U.S. at 322-23; Matsushita Elec., 475 U.S. at 586, 106 S.Ct. 1348; Cal. Arch. Bldg. Prods., Inc. v. Franciscan Ceramics, Inc., 818 F.2d 1466, 1468 (9th Cir.1987). Nor will uncorroborated allegations and "self-serving testimony" create a genuine issue of material fact. Villiarimo v. Aloha Island Air, Inc., 281 F.3d 1054, 1061 (9th Cir.2002); see also T.W. Elec. Serv., 809 F.2d at 630. The nonmoving party must instead set forth "significant probative evidence" in support. T.W. Elec. Serv., 809 F.2d at 630. Summary judgment will thus be granted against a party who fails to demonstrate facts sufficient to establish an element essential to his case when that party will ultimately bear the burden of proof at trial.⁴ See Celotex, 477 U.S. at 322, 106 S.Ct. 2548.

II. Standard for Motion To Dismiss

Under Federal Rule of Civil Procedure 12(b)(6), in evaluating a motion to dismiss for failure to state a claim upon which relief can be granted, this Court must accept as true the plaintiff's allegations contained in the complaint and view them in a light most favorable to the plaintiff. Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974); Wileman Bros. & Elliott, Inc. v. Giannini, 909 F.2d 332, 334 (9th Cir.1990); Shah v. County of Los Angeles, 797 F.2d 743, 745 (9th Cir.1986). Thus, the complaint must stand unless it appears beyond doubt that the plaintiff has alleged no facts that would entitle him to relief. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-02, 2 L.Ed.2d 80 (1957); Balistreri v. Pacifica Police Dept., 901 F.2d 696, 699 (9th Cir.1988). A complaint may be dismissed as a matter of law for two reasons: (1) lack of a cognizable legal theory or (2) insufficient facts under a cognizable legal theory. Balistreri, 901 F.2d at 699; Robertson v. Dean Witter Reynolds, Inc., 749 F.2d 530, 533-34 (9th Cir.1984).

In essence, as the Ninth Circuit has stated, "[t]he issue is not whether a plaintiff's success on the merits is likely but rather whether the claimant is entitled to proceed beyond the threshold in attempting to establish his claims." De La Cruz v. Tormey, 582 F.2d 45, 48 (9th Cir.), cert. denied, 441 U.S. 965, 99 S.Ct. 2416, 60 L.Ed.2d 1072 (1979). The Court must determine whether or not it appears to a certainty under existing law that no relief can be granted under any set of facts that might be proved in support of plaintiff's claims. Id.

A motion under Rule 12(b)(6) should also be granted if an affirmative defense or other bar to relief is apparent from the face of the Complaint, such as lack of jurisdiction or the statute of limitations. 2A J. Moore, W. Taggart & J. Wicker, Moore's Federal Practice, ¶ 12.07 at 12-68 to 12-69 (2d ed.1991 & supp. 1191-92) (citing Imbler v. Pachtman, 424 U.S. 409, 96 S.Ct. 984, 47 L.Ed.2d 128 (1976)).

DISCUSSION

I. Motion for Summary Judgment on TILA Issues

The Truth-in-Lending Act ("TILA"), which is contained in Title I of the Consumer Credit Protection Act, as amended (15 U.S.C. § 1601, et seq.), is intended to assure a meaningful disclosure of credit terms so that consumers can compare more readily various available terms and avoid the uninformed use of credit. 15 U.S.C. § 1601(a). TILA requires that creditors disclose to borrowers specific information, including finance charges, annual percentage rate, and the right to rescind a transaction. See, e.g., 15 U.S.C. §§ 1635, 1638. Regulation Z, 12 C.F.R. Part 226, is issued by the Board of Governors of the Federal Reserve System to implement TILA. See 12 C.F.R. § 226.1(a).

Defendants Executive Mortgage and Ms. Pascual seek summary judgment on the federal claim made under TILA on following grounds: (1) Executive Mortgage and Ms. Pascual are not "creditors" within the meaning of TILA; (2) Executive Mortgage and Ms. Pascual did not violate TILA; and (3) Executive Mortgage and Ms. Pascual did not wrongfully dishonor Plaintiffs' attempted rescission. See Motion for Summary Judgment and to Dismiss at 1-2.

A. Definition of "Creditor"

The parties agree that the disclosure and other requirements of TILA apply only to "creditors." See 15 U.S.C. §§ 1631, 1635, 1637, 16...