Opinion
No. CAAP–13–0002872.
2015-01-26
Lynette L. AGARD, Plaintiff–Appellant, v. DEUTSCHE BANK NATIONAL TRUST COMPANY, as Trustee of the Indymac Indx Mortgage Loan Trust 2006–AR14, Mortgage Pass–Through Certificates Series 2006–AR14 under the Pooling and Servicing Agreement Dated October 1, 2006; Indymac Mortgage Services, Inc.; Onewest Bank FSB, Defendants–Appellees, and John Does 1–50, Jane Does 1–50, Defendants.
Appeal from the Circuit Court of the First Circuit (Civil No. 11–1–0362).Nicole Lehuanani Kinilau, for Plaintiff–Appellant.David B. Rosen, for Defendants–Appellees.
Appeal from the Circuit Court of the First Circuit (Civil No. 11–1–0362).
Nicole Lehuanani Kinilau, for Plaintiff–Appellant. David B. Rosen, for Defendants–Appellees.
Foley, Presiding J. and Reifurth, J., with Ginoza, J. concurring separately.
SUMMARY DISPOSITION ORDER
Plaintiff–Appellant Lynette L. Agard (Agard) appeals
from the following orders and judgment all entered in the Circuit Court of the First Circuit
Agard did not file a timely notice of appeal of the December 26, 2012 “Order Granting in Part and Denying in Part Defendants Deutsche Bank National Trust Company, as Trustee of the IndyMac INDX Mortgage Loan Trust 2006–AR14, Mortgage Pass–Through Certificates, Series 2006–AR14 Under the Pooling and Servicing Agreement Dated October 1, 2006, and OneWest Bank, FSB's Motion for Summary Judgment Filed on July 27, 2012.” The circuit court entered a Hawai‘i Rules of Civil Procedure Rule 54(b) certified judgment on February 21, 2013. Agard's notice of appeal was filed August 14, 2013.
The Honorable Bert I. Ayabe presided.
(1) the April 8, 2013 “Order Granting Defendants Deutsche Bank National Trust Company, As Trustee of the IndyMac INDX Mortgage Loan Trust 2006–AR14, Mortgage Pass–Through Certificates, Series 2006–AR14 Under the Pooling and Servicing Agreement Dated October 1, 2006, and OneWest Bank, FSB's Motion for (a) Reconsideration of the Court's December 26, 2012 Order Regarding Defendants' Motion for Summary Judgment Filed on July 27, 2012, (b) Clarification of Same, And/Or (c) Summary Judgment as to Count I of Plaintiff's First Amended Complaint, Filed on August 8, 2011”;
(2) the April 8, 2013 Final Judgment; and
(3) the August 8, 2013 “Order Denying Plaintiff's Motion for Reconsideration, Filed on April 18, 2013.”
Upon careful review of the record and the briefs submitted by the parties and having given due consideration to the arguments advanced and the issues raised by the parties, as well as the relevant statutory and case law, we resolve Agard's appeal as follows:
(1) Agard cites no authority to support her contentions regarding the alleged-contradiction between conveyance of the Promissory Note (Note) to Deutsche Bank under the Trust and the Second Assignment of the mortgage interest from FDIC to Deutsche Bank on June 10, 2010. “[A]s a matter of common law, the mortgage was automatically transferred with the underlying note.” In re Wright, 2012 WL 27500, at *3 (Bankr.D.Haw. Jan. 5, 2012), reconsideration denied 2012 WL 260744 (Bankr.D.Haw. Jan. 27, 2012) (citing In re Veal, 450 B.R. 897, 916 (B.A.P. 9th Cir.2011); Carpenter v. Longan, 83 U.S. 271, 274–75 (1872) and Restatement (Third) of Property (Mortgage) § 5.4 (1997)). As soon as Deutsche Bank became entitled to enforce the Note, Deutsche Bank succeeded to the mortgagee's interest. Agard did not argue to the circuit court that Deutsche Bank was not the holder of the Note, nor does she challenge the validity of the Trust. Agard's contention that Deutsche Bank obtained the Note on October 31, 2006 and was later assigned the mortgage interest on June 10, 2010 does not raise a genuine issue of material fact as to whether Deutsche Bank was entitled to foreclose on the property. Additionally, there is no genuine issue of material fact to support Agard's claim that Deutsche Bank participated in a “fradulent” transaction in violation of Hawaii Revised Statutes (HRS) § 480–2 (2008 Repl.), unfair and deceptive acts or practices (UDAP).
Agard fails to support her contention that OneWest's failure to identify its principal when it “claimed ownership” in its proof of claim case before the bankruptcy court raised a genuine issue of material fact. Agard does not indicate whether and where in the record she raised the issue of OneWest's authority to file a proof of claim to the circuit court so as to preserve this argument for appeal. We therefore decline to address it on appeal. See Hawai‘i Rules of Appellate Procedure Rule 28(b)(7).
(2)(a) Agard's remaining contentions concern alleged irregularities with Defendants' foreclosure process that, according to Agard, “constitute viable UDAP claims in Count 1, [First Amended Complaint].” A UDAP committed “in the conduct of any trade or commerce [is] unlawful.” HRS § 480–2(a). A contract or agreement in violation of HRS Chapter 480 is void and unenforceable. See HRS § 480–12. Agard's mortgage and loan transaction fell “within the ambit of HRS [Chapter] 480, inasmuch as (1) a loan extended by a financial institution is activity involving conduct of any trade and commerce and (2) loan borrowers are consumers within the meaning of HRS § 480–1 [ (2008 Repl.) ].” Hawaii Cmty. Fed. Credit Union v. Keka, 94 Hawai‘i 213, 227, 11 P.3d 1, 15 (2000) (internal quotation marks omitted); Am. Sav. Bank, F.S.B. v. Riddel, No. CAAP–11–0000559 (App. June 27, 2014) (mem).
To support her UDAP claim under HRS § 480–12, Agard was required to allege: (1) a violation of HRS Chapter 480 or specific types of violations of HRS Chapter 667; (2) injury to plaintiff's business or property resulting from such violation; and (3) proof of the amount of damages. See Hawaii Med. Ass'n v. Hawaii Med. Serv. Ass'n, Inc., 113 Hawai‘i 77, 113–14, 148 P.3d 1179, 1215–16 (2006); Lizza, 1 F.Supp.3d 1106 at *13.
An injury resulting from a UDAP must be “fairly traceable to the defendant's actions.” Flores v. Rawlings Co., LLC, 117 Hawai‘i 153, 167 n.23, 177 P.3d 341, 355 n.23 (2008) (citation and internal quotation marks omitted). Hawai‘i Rules of Civil Procedure Rule 9(b) requires all averments of fraud or mistake to set forth circumstances constituting fraud or mistake with particularity. “The rule is designed, in part, to insure the particularized information necessary for a defendant to prepare an effective defense to a claim which embraces a wide variety of potential conduct.” Larsen v. Pacesetter Sys., Inc., 74 Haw. 1, 30, 837 P .2d 1273, 1288 (1992), amended on reh'g in part, 74 Haw. 650, 843 P.2d 144 (1992) (citation omitted). General allegations are insufficient, “[a] plaintiff must state the circumstances constituting fraud or mistake with particularity (e.g., allege who made the false representations) and specify the representations made .” Larsen, 74 Haw. at 30–31, 837 P.2d at 1288 (citing Ellis v. Crockett, 51 Haw. 45, 59, 451 P.2d 814, 823 (1969)).
(2)(b) The circuit court found Agard's assertions regarding the “robo-sign [ature]” of Erica Johnson–Seck (Johnson–Seck), a OneWest employee, did not overcome Defendants' summary judgment motion because she offered no evidence that the Second Assignment “was signed by a person without authority to act or without knowledge of the contents of the [a]ssignment....” Del Piano v. Mortgage Elec. Registration Sys., Inc., 2012 WL 621975, at *10 (D.Haw.2012). Agard's evidence that Johnson–Seek testified in an unrelated Florida case that she signed a significant percentage of documents without reading them did not establish that Johnson–Seek, the signatory to the Second Assignment, had not read the Second Assignment in the instant case,
Agard's contention that Johnson–Seek lacked authority to execute the Second Assignment dated June 10, 2010 and recorded June 18, 2010, was based on an earlier Limited Power of Attorney (POA), recorded on September 4, 2009 and in effect up to March 19, 2010, thus had no bearing on whether Johnson–Seek was authorized to do so under a subsequent POA. OneWest's attorney declared Johnson–Seck had executed the Second Assignment with authority to do so pursuant to the POA effective from March 20, 2009 through June 19, 2010. Agard cites no authority for her contention that the POA was ineffective absent a corporate seal or a statement revoking an earlier POA.
Agard's belated attempts to introduce expert testimony that Johnson–Seck's signature was a forgery were not erroneously rejected because Agard did not establish why this “new evidence and/or arguments ... could not have been presented during the earlier adjudicated motion.” Ass'n of Apartment Owners of Wailea Elua v. Wailea Resort Co., Ltd., 100 Hawai‘i 97, 110, 58 P.3d 608, 621 (2002).
(2)(c) Agard contends OneWest committed UDAPs by: negotiating in bad faith on her loan modification; reneging on a granting of a loan modification and forcing a forbearance plan on Agard; misrepresenting that Agard had failed to make payments; misapplying Agard's payments and proceeding to publish a Notice of Mortgagee's Intention to Foreclose Under Power of Sale (Notice); “wrongfully us[ing] its own errors to justify its excuse to publish [the Notice]”; instructing Agard not to pay her August 2009 balloon payment, “admitt[ing] that its representative should never have given [Agard] such an instruction” and informing Agard that she was no longer eligible for any payment plan because she had failed to make required payments on her loan modification plan.
Agard's First Amended Complaint alleged with sufficient particularity Defendants' acts in 2009 regarding her loan modification and forbearance plan constituted a UDAP by reason of fraud. Agard submitted moneygram receipts and a declaration attesting to alleged instructions by Indymac to refrain from paying her final August balloon payment and that OneWest “admitted” it had misapplied her February and March 2009 payments. OneWest's attorney declared that in August 2009, Agard contacted OneWest and advised them that “she was unable to make the balloon payment due under the terms of the [March 12, 2009] Forbearance letter.” OneWest advised her “there was nothing further OneWest could offer her at that time.” OneWest's attorney further declared, based on his review of records, Agard's payments had been partly applied to her forbearance plan and the remaining amount was returned to her because the amount remitted did not represent the total amount due at that time.
Seen in a light most favorable to Agard, OneWest attorney's declaration did not refute Agard's claims that a OneWest agent instructed her to not-pay the August 2009 payment and to call back at the end of the month, and that OneWest had “admitted” to having misapplied her payments to other accounts. Querubin v. Thronas, 107 Hawai‘i 48, 56, 109 P.3d 689, 697 (2005). Viewing the evidence in this favorable light, we conclude Defendants did not rebut Agard's allegation that Defendants' agent instructed Agard to refrain from remitting the August 2009 payment and call back later, nor that her misreliance on Defendants' instruction resulted in her loss of interests in the property. Agard's allegations that Defendants instructed her to not-pay her August 2009 payment and then used her non-payment as a basis to rescind the March 12, 2009 forbearance plan raised a genuine issue of material fact that rendered summary judgment for Defendants on Agard's UDAP claims in regard to OneWest's actions improper.
Therefore,
IT IS HEREBY ORDERED that the Circuit Court of the First Circuit's:
(1) April 8, 2013 “Order Granting Defendants Deutsche Bank National Trust Company, As Trustee of the IndyMac INDX Mortgage Loan Trust 2006–AR14, Mortgage Pass–Through Certificates, Series 2006–AR14 Under the Pooling and Servicing Agreement Dated October 1, 2006, and OneWest Bank, FSB's Motion for (a) Reconsideration of the Court's December 26, 2012 Order Regarding Defendants' Motion for Summary Judgment Filed on July 27, 2012, (b) Clarification of Same, And/Or (c) Summary Judgment as to Count I of Plaintiff's First Amended Complaint, Filed on August 8, 2011” is vacated as to its grant of summary judgment on Count I of the Amended Complaint in favor of OneWest and affirmed in all other respects;
(2) April 8, 2013 Final Judgment is vacated as to its grant of summary judgment on Count I of the Amended Complaint in favor of OneWest and affirmed in all other respects; and
(3) August 8, 2013 “Order Denying Plaintiff's Motion for Reconsideration, Filed on April 18, 2013” is vacated as to its grant of summary judgment on Count I of the Amended Complaint in favor of OneWest and affirmed in all other respects. Concurring Opinion by GINOZA, J.
In this appeal, we review whether the Circuit Court of the First Circuit (circuit court) properly granted summary judgment to Defendants–Appellees Deutsche Bank National Trust Company, as Trustee of the IndyMac INDX Mortgage Loan Trust 2006–AR14, Mortgage Pass–Through Certificates Series 2006–AR14 Under the Pooling and Servicing Agreement Dated October 1, 2006 (Deutsche Bank) and OneWest Bank, FSB (OneWest Bank) with regard to Count 1 in Plaintiff–Appellant Lynette Agard's (Agard) First Amended Complaint, which asserted claims of unfair or deceptive acts or practices (UDAP) under Hawaii Revised Statutes (HRS) Chapter 480.
For the reasons stated herein, I concur with the majority that summary judgment on Count 1 was properly granted as to Deutsche Bank, but should not have been granted as to OneWest Bank.
I. UDAP Claims Against Deutsche Bank
With regard to Agard's UDAP claims against Deutsche Bank, Agard contends that conflicting evidence regarding Deutsche Bank's claim of title should have precluded summary judgment. On this issue, the decisive factor in my view is that the Adjustable Rate Note (Note) executed by Agard was transferred to Deutsche Bank. In her opening brief, Agard did not present any substantive argument questioning that Deutsche Bank properly held the Note. In her reply brief, however, Agard argues that Deutsche Bank was not a holder of the Note because a purportedly untimely assignment of mortgage had a reference indicating it was also assigning the related note. Even if Agard's argument in her reply brief is considered, the evidence and applicable common law do not support her contentions.
First, Deutsche Bank carried its burden to show that the Note was transferred to Deutsche Bank. In support of its summary judgment motion, Deutsche Bank submitted the declaration of Charles Boyle (Boyle) in which he attested, inter alia, that after the Note had been indorsed several times, it was indorsed in blank and was in the possession of Deutsche Bank. A copy of the Note, with the endorsements, was attached to Boyle's declaration. Moreover, by the time the circuit court granted summary judgment to Deutsche Bank on Count 1, both Agard and Deutsche Bank had submitted to the circuit court copies of Deutsche Bank's interrogatory responses, which were verified by Boyle, and which stated in relevant part that Deutsche Bank became the owner of the subject loan for the benefit of the certificate holders of the Trust as of the closing date of the Trust, which was October 31, 2006. Hawai‘i Rules of Civil Procedure (HRCP) Rule 56(e) provides in pertinent part that “[t]he court may permit affidavits to be supplemented or opposed by ... answers to interrogatories....”
In her declaration, Agard states that she reviewed the Pooling and Servicing Agreement (PSA) for the subject trust, and that her note and mortgage were not in the trust. However, only one page of the PSA is attached to her materials. Under HRCP Rule 56(e), Agard should have attached a sworn or certified copy of the PSA and could not simply rely on her conclusory statements. Fuller v. Pac. Med. Collections, Inc., 78 Hawai‘i 213, 224, 891 P.2d 300, 311 (App.1995) (“All papers referred to in the affidavits must also be attached and sworn to or certified. These requirements are mandatory .”) (citation and block quote format omitted); Miller v. Manuel, 9 Haw.App. 56, 66, 828 P.2d 286, 292 (1991) (noting that courts will review material submitted regarding a motion for summary judgment for compliance with Rule 56(e) and that “ultimate or conclusory facts or conclusions of law are not to be utilized in a summary judgment affidavit[ ]”).
Second, as stated in the majority opinion, the common law provides that when there is a note and related mortgage, the mortgage automatically transfers with the underlying note. Carpenter v. Longan, 83 U.S. (16 Wall.) 271, 274 (1872) (“The note and mortgage are inseparable; the former as essential, the latter as an incident. An assignment of the note carries the mortgage with it [.]”); In re Veal, 450 B.R. 897, 916 (B.A.P. 9th Cir.2011) (“This rule appears to be the common law rule.”); In re Wright, No. 10–03893, 2012 WL 27500, at *3 (Bankr.D.Haw. Jan. 5, 2012) (holding that the date of an assignment of mortgage was irrelevant to establish timeliness of transfer of the mortgage into a trust where a related note was timely transferred into the trust because “as a matter of common law, the mortgage was automatically transferred with the underlying note”); Restatement (Third) of Prop.: Mortgages § 5.4 (1997). Moreover, under the common law, once a note is transferred, a subsequent assignment of the mortgage is a nullity. See Carpenter, 83 U.S. (16 Wall.) at 274 (“An assignment of the note carries the mortgage with it, while an assignment of the latter alone is a nullity.”); In re Wright, 2012 WL 27500, at *3 (“[Bank] succeeded to the mortgagee's interest automatically as soon as it became entitled to enforce the note. The formal assignment of the mortgage at a later date is surplusage.”).
In this case, therefore, Agard's reliance on an assignment of mortgage to challenge whether Deutsche Bank had title to foreclose is misplaced. Rather, given the evidence that the Note was previously transferred to Deutsche Bank, any of the assignments of mortgage thereafter in this case were a nullity. Moreover, the questions raised by Agard about the validity of the mortgage assignments appear to be immaterial with regard to Agard's UDAP claims against Deutsche Bank in Count 1. Indeed, all of Agard's claims under Count 1 against Deutsche Bank relate to allegations about improperly separating the Note and mortgage, improperly claiming an interest in the subject property, the alleged improper assignments of the mortgage, and other related allegations. Because the mortgage automatically transferred with the Note, Deutsche Bank was entitled to foreclose on the property and the circuit court properly granted summary judgment to Deutsche Bank on Count 1.
II. UDAP Claims Against OneWest
With regard to Agard's claims against OneWest in Count 1, she alleges various misconduct by OneWest related to her attempts to modify the loan. Agard contends and attests in her declaration submitted to the circuit court, inter alia, that: OneWest made misrepresentations by agreeing to a loan modification, acknowledging receipt of payment from her per the agreement, and then reneging on the loan modification without justification; OneWest misrepresented that Agard had failed to make payments in February and March 2009 when she had receipts to show she made the payments; OneWest misapplied Agard's payments; and a OneWest representative instructed Agard not to make a payment in August 2009 and then OneWest subsequently informed Agard she was no longer eligible for loan modification in part because she failed to make the August 2009 payment.
OneWest, in turn, submitted a declaration by Boyle in which he attests, inter alia, that: Agard was offered and signed a stipulated forbearance plan indicating that a review was being done to determine if Agard qualified for a loan modification, and which required that Agard make certain payments in the interim; Agard failed to make a required payment; Agard was determined to be ineligible for loan modification; a further forbearance plan was later proposed, which Agard signed; and while Agard made the first five payments under this latter plan, she failed to make the sixth balloon payment.
Given the contradictory evidence adduced by Agard and OneWest, there are genuine issues of material fact with regard to Agard's claims for UDAP under HRS Chapter 480 against OneWest. See Hawaii Cmty. Fed. Credit Union v. Keka, 94 Hawai‘i 213, 227–29, 11 P.3d 1, 15–17 (2000) (holding that genuine issues of material facts existed where defendants' affidavits raised questions regarding credit union's allegedly deceptive practices). Thus, summary judgment should not have been entered in favor of OneWest on Agard's UDAP claim in Count 1.
For these reasons, I respectfully concur.