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Lisa Hinano Rey v. Countrywide Home Loans

January 26, 2012


The opinion of the court was delivered by: J. Michael Seabright United States District Judge



On March 7, 2011, Plaintiff Lisa Hinano Rey ("Plaintiff") filed this action alleging claims against Defendants Countrywide Home Loans, Inc. ("Countrywide") and Bank of America d/b/a/ BAC Home Loans Servicing, LP ("BANA") (collectively, "Defendants"), for violations of the Truth in Lending Act, the Real Estate Settlement Procedures Act of 1974 ("RESPA"), the Fair Credit Reporting Act, the Equal Credit Opportunity Act, and various state law claims stemming from a mortgage transaction concerning real property located at 7429 Ainanani Place, Honolulu, Hawaii (the "subject property").

On June 1, 2011, the court dismissed the Complaint for failure to state a claim, and on September 13, 2011, the court sanctioned Plaintiff's counsel, Robin Horner, pursuant to Federal Rule of Civil Procedure 11 after he filed an Amended Complaint that was substantially similar to the dismissed Complaint. The court further granted Plaintiff leave to file a Second Amended Complaint ("SAC"), which she did on September 27, 2011. The SAC asserts claims for violation of RESPA and state law claims for fraud, violation of Hawaii Revised Statutes ("HRS") Ch. 480, and intentional infliction of emotional distress ("IIED") based on the loan modification process she engaged in with Defendants.

Currently before the court is Defendants' Motion to Dismiss the SAC, in which they assert that Plaintiff has failed to state a claim upon which relief can be granted such that the SAC should be dismissed with prejudice. Based on the following, the court GRANTS in part and DENIES in part Defendants' Motion to Dismiss.


A. Factual Background

As alleged in the SAC, on March 26, 2007, Plaintiff entered into a mortgage loan transaction with Countrywide to purchase the subject property. Doc. No. 49, SAC ¶ 17. Plaintiff subsequently suffered financial hardship, yet continued to make payments on her mortgage in a timely manner. Id. ¶¶ 20-21. In 2008, Plaintiff approached BANA (who by this point was apparently asserting ownership of the mortgage and note)*fn1 to seek relief from her loan payments through a work-out agreement, forbearance agreement, or loan modification. Id.

¶ 22. On May 12, 2009, Plaintiff made a work-out request to BANA. Id. ¶ 23.

Effective November 29, 2009, "BANA [] entered into a repayment plan with [Plaintiff] . . . for six months." Id. ¶ 29. In the meantime, however, BANA also began to omit giving Plaintiff credit for her mortgage payments and misapplied seven of Plaintiff's payments. Id. ¶ 24.

On January 8, 2010, BANA declined Plaintiff as qualified for a loan modification through the Home Affordable Modification Program ("HAMP").

Id. ¶ 25. On February 29, 2010, however, BANA did an apparent about-face and told Plaintiff that it would honor the loan modification. Id. ¶ 26. Thus, on April 13, 2010, BANA offered Plaintiff a loan modification, which Plaintiff signed and returned by the May 10, 2010 deadline. Id. ¶ 31. In response, BANA told Plaintiff that her documents had been timely received, her paperwork was being processed, and she could disregard any foreclosure notices. Id. ¶ 32.

From March 17, 2010 through at least June 7, 2010 -- apparently during the time that BANA was processing Plaintiff's loan modification -- BANA again omitted giving Plaintiff credit for her loan payments. Id. ¶ 27. As a result, BANA claimed that Plaintiff was behind thirteen loan payments even though it had misapplied at least seven payments. Id. ¶ 28. Further, on May 15, 2010, BANA declined Plaintiff's loan modification on the basis that Plaintiff had failed to return all the necessary paperwork by the May 10, 2010 deadline. Id. ¶ 33. In yet another about-face, however, on May 28, 2010, BANA gave Plaintiff "notice that her loan documents had been received and were in the completion status of processing."

Id. ¶ 34.

In July 2010, one of Plaintiff's loan payments was returned on the basis that it needed to be notarized. Id. ¶ 35. Notarization was not a requirement of the loan modification and BANA had not previously required it. Id. On July 14, 2010, BANA returned Plaintiff's loan to foreclosure. Id. ¶ 36. As a result, BANA returned another check to Plaintiff on the basis the check was insufficient to reinstate the loan. Id. ¶ 37.

On September 27, 2010, BANA issued a notice of intent to foreclose on November 29, 2010. Id. ¶¶ 38, 39. According to the SAC, this notice conflicts with BANA's previous assertion that an undisclosed investor owned the note on the subject property. Id. ¶ 38. After receiving this Notice, Plaintiff resubmitted her request for loan modification with all supporting documentation on October 9, 2010. Id. ¶ 40. By October 26, 2010, BANA was considering Plaintiff's request and told her that the subject property would not be subject to foreclosure during the review process, even though BANA was in fact still proceeding with the foreclosure Id. ¶ 41.

The SAC further asserts that on October 27, 2010, "Plaintiff submitted a qualified written request to [BANA]," id. ¶ 42, and that BANA "failed to respond to the qualified written request within twenty days . . . and failed to resolve the matter within [sixty] days." Id. ¶ 43. Instead, on January 26, 2011, BANA responded to the qualified written request by reporting that the loan had not been paid since January 2010, which was not true. Id. ¶ 44. Further, on January 31, 2011, BANA informed Plaintiff that she was behind thirteen payments. Id. ¶ 46.

BANA also allegedly "overstated the alleged overdue amounts and returned her payments making it impossible for [Plaintiff] to comply with the notes and mortgage or the forbearance and modification agreements." Id. ¶¶ 45-46.

On March 3, 2011, BANA "informed [Plaintiff] she was behind [ten] payments even though it had failed and refused to accept any payments from [Plaintiff]," and also asserted that Plaintiff must bring the loan current in order to reinstate the loan, even though BANA had failed to "properly account for and inform [Plaintiff] of the precise amounts due and failed to properly credit and offset her prior payments, and forego wrongfully charged fees." Id. ¶ 47. Thus, on March 9, 2011, the foreclosure sale went forward despite Plaintiff's efforts to reach an agreement on modification. Id. ¶ 48.

After the foreclosure sale, Plaintiff continued to receive statements from BANA for the modified loan payment amounts. Id. ¶ 49. Plaintiff was also informed that the owner of her loan was now "FNMA ACT/ACT," and that BANA "was not to be the loan servicer until July 1, 2011," apparently conflicting with BANA's role in handling the loan servicing up until this point. Id. ¶ 50. According to the SAC, BANA "made it impossible to know who the loan servicer was to be able to straighten out any confusion concerning the terms of the loan modification which certain employees were acknowledging would be honored, while other employees refused to allow the modification to go into effect." Id.

¶ 51. The SAC further asserts that BANA took these actions to prevent Plaintiff "from performing in order to facilitate the foreclosure of the [subject property] and wrongfully collect debt that was not owed." Id. ¶ 52; see also id. ¶ 53. As a result, the SAC asserts that Plaintiff "was completely left in the dark and misinformed as to who was the real party in interest so she could discuss a work-out request and confirm the precise amount of money the creditor was owned and make suitable arrangements for a workout or modification." Id. ¶ 54.

B. Procedural Background

On March 7, 2011, Plaintiff filed this action by filing a boilerplate Complaint (that is, a nearly identical Complaint that her counsel, Robin Horner, had filed in several other actions) alleging claims against Defendants for violations of various federal and state laws stemming from the mortgage transaction on the subject property. This court had already dismissed several of the boilerplate Complaints Horner had filed in other actions, and on June 1, 2011, the court dismissed the Complaint for the same reasons the court had already outlined to Horner on numerous occasions (the "June 1, 2011 Order"). See Doc. No. 21.

Plaintiff failed to timely file an Amended Complaint, and the action was dismissed on June 29, 2011. Doc. Nos. 23, 24. The court subsequently granted Plaintiff's Motion to Reopen the action, and Plaintiff filed an Amended Complaint on August 24, 2011. Because the Amended Complaint suffered from many of the same deficiencies as the Complaint, on September 13, 2011, the court issued Rule 11 sanctions against Horner and granted Plaintiff leave to file her SAC.

On September 27, 2011, Plaintiff filed her SAC asserting claims for violation of RESPA (Count I), fraud (Count II), violation of HRS Ch. 480 (Count III), and IIED (Count IV). On October 21, 2011, Defendants filed their Motion to Dismiss the SAC. Plaintiff filed her Opposition on January 4, 2012, and Defendants filed their Reply on January 11, 2012. A hearing was held on January 23, 2012.


A. Rule 12(b)(6)

Federal Rule of Civil Procedure 12(b)(6) permits a motion to dismiss a claim for "failure to state a claim upon ...

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