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Luckie L. Rodenhurst and Roxanne Craig-Rodenhurst v. Bank of America Fka Countrywide Homes Loans

September 30, 2011


The opinion of the court was delivered by: Leslie E. Kobayashi United States District Judge


Before the Court is Defendants Bank of America, formerly known as Countrywide Home Loans Inc. ("BOA"), HSBC Bank USA, N.A. ("HSBC"), and BAC Home Loans Servicing, LP's ("BAC," all collectively "Defendants") Motion to Dismiss Plaintiffs' Second Amended Complaint ("Motion"), filed on May 12, 2011.*fn1

Plaintiffs Luckie L. Rodenhurst and Roxanne Craig-Rodenhurst (collectively "Plaintiffs") filed their memorandum in opposition on August 5, 2011, and Defendants filed their reply on August 15, 2011. This matter came on for hearing on August 29, 2011. Appearing on behalf of Defendants were Amanda Jones, Esq., and Patricia McHenry, Esq., and appearing on behalf of Plaintiffs was Robin Horner, Esq. After careful consideration of the Motion, supporting and opposing memoranda, and the arguments of counsel, Defendants' Motion is HEREBY GRANTED for the reasons set forth below.


I. Factual and Procedural Background

This is the second time the parties have been before the Court on a motion to dismiss filed by Defendants. On February 23, 2011, the Court entered an order granting in part and denying in part Defendant BOA's Motion to Dismiss Plaintiffs' First Amended Complaint, filed December 13, 2011 ("February 23, 2011 Order"), as follows:

1. Counts I and II (Truth in Lending Act, 15 U.S.C. § 1601 et seq. ("TILA") claims), and III (Real Estate Settlement Procedures Act, 12 U.S.C. § 2601 et seq. ("RESPA") claim) were DISMISSED WITH PREJUDICE;

2. Counts IV (unfair or deceptive acts or practices ("UDAP")), V (fraud), VI (civil conspiracy), VII (aiding and abetting), IX (improper securitization) and X (conversion) were DISMISSED WITHOUT PREJUDICE.

3. Plaintiffs were granted leave to file a Second Amended Complaint, by April 20, 2011, pleading causes of action against the proper defendants and corporate entities, and under the proper theories.

[See February 23, 2011 Order at 30.]

Plaintiffs filed their Second Amended Complaint on April 20, 2011. [Dkt. no. 41.] The Second Amended Complaint, like the First Amended Complaint, alleges that Plaintiffs entered into a loan transaction with Countrywide Home Loans, Inc. ("Countrywide") to refinance a loan on their property located at 46-263 Auna Street, Kaneohe, Hawai'i ("Property"). [Second Amended Complaint at ¶¶ 12, 19.] Plaintiffs allege that their loan application information was "changed by the local loan officer and/or INDCAP Independent Capital, Inc. ("Indcap") and/or Mr. Sterling Ing or others from Countrywide," and Plaintiffs' incomes were grossly inflated. [Id. at ¶ 17.] The "local loan officer, together with Indcap, . . . and/or [Countrywide]" placed Plaintiffs in an adjustable rate mortgage, without disclosing this information, or providing Plaintiffs with a completed, signed and dated copy of the loan application. [Id. at ¶¶ 18-19.] Neither the local loan officer, Incap, Mr. Ing, nor Countrywide are named as defendants.

Plaintiffs executed a promissory note dated March 23, 2007, and claim that they signed the loan agreement without an explanation of its terms or an opportunity to review the documents. They also claim that they signed the loan agreement in the absence of a public notary. [Id. at ¶¶ 21-27.] Plaintiffs experienced financial distress, and defaulted on the loans. Defendants initiated non-judicial foreclosure proceedings, and the Property was sold at auction to HSBC. [Id. at ¶¶ 38-46.]

Plaintiffs allege the following causes of action: (1) Count I (RESPA violations); (2) Count II (fraudulent misrepresentation); (3) Count III (breach of fiduciary duty); (4) Count IV (unjust enrichment); (5) Count V (civil conspiracy); (6) Count VI (violation of Hawaii Bureau of Conveyance regulations); (7) Count VII (mistake) ; (8) "Count XII" (unconscionability); (9) "Count XIII" (UDAP); (10) Count IX (failure to act in good faith); (11) Count X (breach of contract"); (12) Count XI (negligent and/or intentional infliction of emotional distress); (13) a second "Count XII" (violation of Gramm-Leach-Bliley Act); and (14) a second "Count XIII" (violation of the State constitutional right of privacy).*fn2

II. Motion to Dismiss

Defendants asks the Court to dismiss all claims against them with prejudice. The Motion argues that the Second Amended Complaint disregards the Court's February 23, 2011 Order and attempts to prolong this litigation by adding unauthorized and frivolous claims and continuing to make vague assertions. Among other problems, the Second Amended Complaint:

(1) Adds several new parties and claims that the Court did not authorize and that Plaintiffs did not seek leave to add, including resurrecting claims that were in the original complaint but were eliminated from the FAC;

(2) Asserts claims for alleged violations of state and federal provisions even though those provisions do not authorize private causes of action (e.g., Hawaii Bureau of Conveyance regulations (Count VI) and the Gramm-Leach-Bliley Act (Count XII);

(3) Re-asserts a claim under the Real Estate Settlement Procedures Act that the Court previously dismissed with prejudice;

(4) Fails to correct the pleading deficiencies for claims that were previously asserted and dismissed because Plaintiffs' allegations were vague and conclusory;

(5) Fails to correct the improper naming of "Bank of America fka Countrywide Home Loans, Inc." as a defendant even though Plaintiffs were told "Bank of America" is not a legal entity and the Court instructed Plaintiffs that they "must plead their causes of action against the proper defendants and corporate entities." [Motion at 2-3.]

A. "Bank of America"

Defendants first argue that "Bank of America," as named, is not a legal entity capable of being sued. [Mem. in Supp. of Motion at 5 (citing Duarte v. Bank of America, No. 10-00372, 2011 WL 1399127, at *3 (D. Haw. Apr. 12, 2011) ("'Bank of America' is a trade name, not a legal entity, and therefore cannot be sued.")).] Despite the case law and this Court's instruction, Plaintiffs again name "Bank of America fka Countrywide Home Loans, Inc." as a defendant, and Defendants argue that all claims against this non-existent entity should be dismissed because: (1) it is incapable of being sued; and (2) Plaintiffs had notice and an opportunity to cure this pleading defect, but did not do so. [Id. at 6.] Further, any claims asserted based on alleged wrongs by Countrywide should be dismissed because the Second Amended Complaint fails to allege sufficient facts to support a derivative theory of liability. [Id. at 7.]

B. Unauthorized Claims

Defendants next argue that Counts I, III, IV, VI, VII, XII (unconscionability), IX, X, XI, XII (Gramm-Leach-Bliley Act), and XIII (right to privacy) should be dismissed or stricken because the Court's February 23, 2011 Order did not authorize Plaintiffs to file these claims and Plaintiffs have not sought leave to add new claims. In any event, these unauthorized claims fail to state plausible claims. [Id. at 7-8.]

C. Authorized Claims

The Court allowed Plaintiffs to amend their claims for fraud, conspiracy, and UDAP, but the Second Amended Complaint fails to cure the earlier deficiencies, according to Defendants. Plaintiffs fail to plead fraud (Count II) and civil conspiracy (Count V) with particularity as required by Fed. R. Civ. P. 9(b), and their UDAP claim (Count XIII) fails to state a claim against Defendants based on Countrywide's alleged conduct. [Id. at 28-31.]

III. Memorandum in Opposition

Plaintiffs' memorandum in opposition argues that they properly named Defendants in their Second Amended Complaint. The Notice of Intention to Foreclose Under Power of Sale filed by HSBC listed its address as "C/O Bank of America fka Countrywide Home Loans, Inc." [Mem. in Opp. at 3 (citing Exh. F to Defendants' Motion).] Plaintiffs argue that they should be allowed to bring claims against "Bank of America fka Countrywide Home Loans, Inc." [Id. at 4.]

Plaintiffs assert that their Second Amended Complaint sets forth sufficient factual allegations to survive the Motion, and "identifies many unlawful actions, wrongful acts, omissions, nondisclosures, concealment of material facts, by the Defendants and its employees, agents, transferees, successors, and assigns." [Id.]

Plaintiffs also argue that they should be allowed to conduct discovery and amend their complaint again because of unspecified fraudulent conduct and a conspiracy perpetrated by Defendants. [Id. at 6.] Plaintiffs attach a proposed Third Amended Complaint, but do not otherwise address the arguments made by Defendants in their memorandum in support of the Motion.

IV. Reply

In their reply, Defendants argue that, with the exception of their argument that they have sufficiently pled fraud, Plaintiffs did not dispute any of the legal analysis or argument presented in the Motion in their memorandum in opposition, and have conceded these claims. [Reply at 1.]

A. "Bank of America"

That HSBC referred to "Bank of America" by its trade name for purposes of identifying HSBC's address does not transform a trade name into a legal entity capable of being sued. Defendants argue that Plaintiffs have no legitimate excuse for failing to name an appropriate legal entity in light of the Court's previous ruling. [Id. at 2.]

B. Failure to Address Defendants' Arguments

Defendants state that Plaintiffs failed to address the following arguments raised by the Motion:

* Count I (RESPA claim) fails because Plaintiffs did not send their purported qualified written request to the loan servicer, the request did not seek information relating to servicing, and Plaintiffs did not allege damages. Motion at 42-1 at 9-12.

* Count III (breach of fiduciary duty) fails because lenders do not owe fiduciary duties to borrowers unless a special relationship exists (which was not pled). Id. at 13-14.

* Count IV (unjust enrichment) fails because the SAC did not allege facts showing Plaintiffs conveyed a benefit upon the Defendants. Id. at 14-15.

* Count V (violation of Bureau of Conveyance regulations) fails because, among other reasons, a failure to record does not create a cognizable claim. Id. at 15-19.

* Count XII (unconscionability) fails because unconscionability is not an affirmative claim for relief, but rather is a defense. Id. at 20-21.

* Count IX (failure to act in good faith) fails because the covenant of good faith and fair dealing is not an ...

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