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Bernadette M. Paik-Apau v. Deutsche Bank National Trust Co.

January 31, 2012

BERNADETTE M. PAIK-APAU
PLAINTIFF,
v.
DEUTSCHE BANK NATIONAL TRUST CO., AS TRUSTEE IN TRUST OFTHE BENEFIT OF THE CERTIFICATE HOLDERS FOR
AMERIQUEST MORTGAGE SECURITIES TRUST 2005-R11; AMERIQUEST MORTGAGE COMPANY; AMERIQUEST MORTGAGE SECURITIES; AMERICAN HOME MORTGAGE SERVICING, INC.; ROUTH CRABTREE AND OLSEN,
DEFENDANTS.



The opinion of the court was delivered by: Susan Oki Mollway Chief United States District Judge

ORDER (1) GRANTING DEFENDANT ROUTH CRABTREE OLSEN'S MOTION FOR SUMMARY JUDGMENT WITH REGARD TO CAUSES 10, 11, AND 12 OF PLAINTIFF'S FIRST AMENDED CLAIM FILED ON MAY 16, 2011; (2) GRANTING DEFENDANTS AMERIQUEST MORTGAGE COMPANY AND AMERIQUEST SECURITIES, INC.'S MOTION FOR SUMMARY JUDGMENT; (3) GRANTING DEFENDANT AMERICAN HOME MORTGAGE SERVICING, INC.'S JOINDER; AND (4) GRANTING IN PART AND DENYING IN PART DEFENDANT DEUTSCHE BANK NATIONAL TRUST COMPANY'S JOINDER

I. INTRODUCTION.

Plaintiff Bernadette Maria Paik-Apau (hereinafter "Paik-Apau"), proceeding pro se, has filed suit against Deutsche Bank National Trust Co. ("Deutsche Bank"), Ameriquest Mortgage Company ("AMC"), Ameriquest Mortgage Securities ("AMS"), American Home Mortgage Servicing, Inc. ("AHMSI"), and Routh Crabtree Olsen ("RCO") (collectively, "Defendants"), asserting a number of claims relating to a foreclosure on her real property.

RCO, the law firm that represented Deutsche Bank when it initiated foreclosure proceedings against Paik-Apau, now moves for summary judgment against Paik-Apau on Causes 10 (breach of fiduciary duty), 11 (noncompliance with section § 667-5 of Hawaii Revised Statutes), and 12 (fraud by collusion for enrichment). The motion is GRANTED.

Also before this court is a Motion for Summary Judgment ("AMC Motion") filed by AMC and AMS as to the claims asserted against them. Those claims sound in fraud and attempt to invalidate the loan origination. American Home Mortgage Servicing, Inc. ("AHMSI"), and Deutsche Bank National Trust Company ("Deutsche Bank") filed their Joinder in Defendants Ameriquest Mortgage Company and Ameriquest Mortgage Securities, Inc.'s Motion for Summary Judgment ("Joinder") to the extent the AMC Motion is based on a release of claims in a settlement agreement. Summary judgment is GRANTED to AMC and AMS, GRANTED to AHMSI, GRANTED to Deutsche Bank on Causes 12 and 13, but DENIED as to Deutsche Bank on Causes 7 and 8.

II. BACKGROUND FACTS.

Paik-Apau alleges that, on or around November 25, 2005, she executed mortgage documents for a loan from AMC for $415,000. See First Am. Claim ("FAC") ¶ 9, ECF No. 46. She alleges that, on December 1, 2005, her mortgage was securitized in a pool of mortgages referred to as "Ameriquest Mortgage Securities, Inc. Asset-Backed Pass-Through Certificates, Series 2005-R11" under a Pooling and Servicing Agreement among AMC, AMS, and Deutsche Bank. Id. ¶ 15. She says that her mortgage note was sold by AMC to AMS, then by AMS to a pool of investors for which Deutsche Bank is the trustee. Id. ¶ 16. According to Paik-Apau, in or around July 2006, AMC sold its servicing rights to Citi Residential, which in turn sold its servicing rights to AHMSI. Id. ¶ 11.

Paik-Apau alleges that, beginning in July 2009, she attempted to discuss a possible loan modification with AHMSI, but AHMSI did not respond to her correspondence. Id. ¶ 13. PaikApau says that, on or around January 2, 2010, she received notice that RCO had been retained to foreclose on her property. Id.

¶ 17. On January 7, 2010, RCO recorded a Notice of Mortgagee's Intention to Foreclose Under Power of Sale ("Notice of Intention to Foreclose") with the Bureau of Conveyances. See Exhibits "A1-010" to "A1-012" to FAC, ECF No. 46-3. The Notice of Intention to Foreclose is signed by Derek Wong, a Hawaii attorney, as attorney for mortgagee Deutsche Bank. Id.

Paik-Apau filed her Complaint for Emergency Injunctive and Declaratory Relief and to Stay Foreclosure Sale and Extension by Fraudulent Concealment on November 26, 2010. See Compl., ECF No. 1. The court dismissed her complaint on April 15, 2011. See Order Dismissing Compl. with Leave to Amend, ECF No. 43. On May 16, 2011, Paik-Apau filed her first amended complaint, titled "First Amended Claim Deceptive and Misleading Statements; Fraudulent Representations; Circumvention of HRS 502-63; Fraudulent Documents; Fraudulent Misrepresentation of Time to Cancel; Fraudulent Mortgage Assignment; Lack of Standing to Foreclose; Negligence in Fiduciary Duty; Non-Compliance with HRS 667-5; Collusion for Enrichment; Extension by Fraud." See FAC, ECF No. 46. The FAC alleges, among other things, that AMC fraudulently misrepresented certain facts during the loan origination period and that Deutsche Bank lacks standing to foreclose on her mortgage because her note and mortgage were improperly transferred from AMC.

On June 29, 2011, attorney Derek Wong, on behalf of Deutsche Bank, recorded a Notice of Rescission in the Bureau of Conveyances that stated that "Mortgagee does hereby rescind, cancel and withdraw said Notice of Mortgagee's Intention to Foreclose Under Power of Sale." See Exhibit "2" to Def. Routh Crabtree Olsen's Concise Statement of Facts in Support of its Mot. For Summ. J. With Regard to Causes 10, 11 and 12 of Pl.'s First Am. Claim Filed on May 16, 2011 ("RCO CSF"), ECF No. 61-3. Paik-Apau alleges that she was not informed of the rescission until RCO filed the present motion. At the hearing on this motion, RCO said that it is not required to notify the homeowner of the rescission of a foreclosure and does not typically do so. RCO's Motion for Summary Judgment ("RCO Motion") addresses the three claims asserted against it.

The AMC Motion is premised on proceedings in multi-district litigation and a consolidated class action (the "MDL"), commenced in the United States District Court for the Northern District of Illinois as In re Ameriquest Mortgage Co. Mortgage Lending Practices Litigation, MDL No. 1715, Lead Case No. 05-7097.*fn1 See Borrowers' First Am. and Consolidated Class Action Compl., attached as Exhibit "4" to Def. Ameriquest Mortgage Company and Ameriquest Mortgage Securities, Inc.'s Concise Statement of Material Facts in Support of Their Mot. for Summ. J. ("AMC CSF"), ECF No. 58-8. AMC was a named defendant in the MDL, which involved various alleged wrongdoings regarding mortgage loan origination. Id. As a part of the MDL, the parties entered into a settlement agreement whereby the class released its claims against the defendants in exchange for $22 million. See Settlement Agreement ("MDL Settlement Agreement"), attached as Exhibit "5" to AMC CSF, ECF No. 58-9. AMS was included in the settlement as an "Ameriquest Released Party," and claims against "Servicers, Investors and Trustees" were also released. Id. at 14-15.

AMC and AMS claim that Paik-Apau was a putative class member who was sent a class settlement notice in January 2010 informing her that she could opt out of the settlement. See Decl. of Amy Lake ¶¶ 5-6, ECF No. 58-3. That was before PaikApau filed the present lawsuit. A class notice was also published in USA Today and Parade. Id. ¶ 9. See class notice, attached as Exhibit "6," and published notice, attached as Exhibit "7" to AMC CSF, ECF Nos. 58-10 and -11. Paik-Apau did not respond to the class notice. Decl. of Amy Lake ¶ 10, ECF No. 58-3. Paik-Apau claims that she did not receive the class notice and that she did not know about the MDL until January, February, or March 2010. See Pl.'s Mem. in Opp'n to Mot. for Summ. J. ("Opposition to AMC Motion") at 5, 7, 10, ECF No. 74.

III. STANDARD OF REVIEW.

Summary judgment shall be granted when "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a) (2010). See Addisu v. Fred Meyer, Inc., 198 F.3d 1130, 1134 (9th Cir. 2000). The movants must support their position that a material fact is or is not genuinely disputed by either "citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for the purposes of the motion only), admissions, interrogatory answers, or other materials"; or "showing that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact." Fed. R. Civ. P. 56(c). One of the principal purposes of summary judgment is to identify and dispose of factually unsupported claims and defenses. Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986).

Summary judgment must be granted against a party that fails to demonstrate facts to establish what will be an essential element at trial. See id. at 323. A moving party without the ultimate burden of persuasion at trial--usually, but not always, the defendant--has both the initial burden of production and the ultimate burden of persuasion on a motion for summary judgment. Nissan Fire & Marine Ins. Co., Ltd. v. Fritz Cos., 210 F.3d 1099, 1102 (9th Cir. 2000).

The burden initially falls upon the moving party to identify for the court those "portions of the materials on file that it believes demonstrate the absence of any genuine issue of material fact." T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir. 1987) (citing Celotex Corp., 477 U.S. at 323). "When the moving party has carried its burden under Rule 56(c), its opponent must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986) (footnote omitted).

The nonmoving party may not rely on the mere allegations in the pleadings and instead must set forth specific facts showing that there is a genuine issue for trial. T.W. Elec. Serv., Inc., 809 F.2d at 630. At least some "'significant probative evidence tending to support the complaint'" must be produced. Id. (quoting First Nat'l Bank of Ariz. v. Cities Serv. Co., 391 U.S. 253, 290 (1968)). See Addisu, 198 F.3d at 1134 ("A scintilla of evidence or evidence that is merely colorable or not significantly probative does not present a genuine issue of material fact."). "[I]f the factual context makes the non-moving party's claim implausible, that party must come forward with more persuasive evidence than would otherwise be necessary to show that there is a genuine issue for trial." Cal. Arch'l Bldg. Prods., Inc. v. Franciscan Ceramics, Inc., 818 F.2d 1466, 1468 (9th Cir. 1987) (citing Matsushita Elec. Indus. Co., 475 U.S. at 587). Accord Addisu, 198 F.3d at 1134 ("There must be enough doubt for a 'reasonable trier of fact' to find for plaintiffs in order to defeat the summary judgment motion.").

All evidence and inferences must be construed in the light most favorable to the nonmoving party. T.W. Elec. Serv., Inc., 809 F.2d at 631. Inferences may be drawn from underlying facts not in dispute, as well as from disputed facts that the judge is required to resolve in favor of the nonmoving party. Id. When "direct evidence" produced by the moving party conflicts with "direct evidence" produced by the party opposing summary judgment, "the judge must assume the truth of the evidence set forth by the nonmoving party with respect to that fact." Id.

IV. THE RCO MOTION.

A. Paik-Apau Fails To Raise Any Genuine Issue Of Material Fact As To Cause 10. Paik-Apau first asserts that RCO negligently breached a fiduciary duty when it filed documents on behalf of Defendants to institute foreclosure proceedings:

RCO illegally filed a foreclosure notice knowing that DBNTC had no standing to foreclose and that assignment was made only to facilitate the foreclosure and to deceive the Plaintiff and the court into believing that DBNTC had standing, which it did not. RCO as an attorney should have verified that standing of its client to foreclose before filing the Intent to Foreclosure [sic] Notice. RCO was retained before the assignment was signed and should have been wary that both the Intent to Foreclose and the assignment were being recorded on the same day.

Compl. ¶ 60, ECF No. 46. This claim appears to stem from PaikApau's misunderstanding of the nature of a fiduciary relationship. In her deposition, Paik-Apau testified that she believed that any law firm owed her a fiduciary duty by virtue of a lawyer's ethical duties:

Q. Okay. What's your understanding of what fiduciary duty is?

A. To me, fiduciary, or fiduciary, as you pronounce it, I don't know whether it's --

Q. --yeah, I'm not sure it's right either --

A. --yeah. Is a duty as a lawyer to know the, the laws regarding, in this case, foreclosure actions and so forth, and who is legally able to -- who has standing to foreclose and so forth.

That's my understanding of fiduciary duty.

Q. Okay. So, in this count are you claiming that RCO owed a fiduciary duty to you?

A. Yes. I, I believe they do, as a lawyer, as a law firm, that anything that goes through that law firm should indeed be upright, legal.

Pl. Dep. 236:16-237:5, Sept. 12, 2011, ECF No. 61-2.

These allegations do not give rise to a breach of fiduciary duty. Before a plaintiff may sue a defendant for breach of a duty, the plaintiff must establish that the defendant owed a duty to the plaintiff. The existence of a duty is entirely a question of law. Bidar v. Amfac, Inc., 66 Haw. 547, 552, 669 P.2d 154, 158 (1983). In determining whether a duty is owed, the court "must weigh the considerations of policy which favor the appellants' recovery against those which favor limiting the appellees' liability." Blair v. Ing, 95 Haw. 247, 260, 21 P.3d 452, 465 (2001).

No law creates a general fiduciary duty owed by any law firm to all individuals. Paik-Apau appears to argue that RCO owed her a duty based on a lawyer's professional responsibility. See Pl. Dep. 236:16-237:5, ECF No. 61-2. Although a professional may be liable to someone who has not retained that professional, that claimant must show the existence of a relationship with the professional giving rise to a duty of care. See Blair, 95 Haw. at 259, 21 P.3d at 464 (holding that "where the relationship between an attorney and a non-client is such that we would recognize a duty of care, the non-client may proceed under either negligence or contract theories of recovery"). Paik-Apau does not allege a relationship between herself and RCO that gives rise to any duty owed by RCO to her. Paik-Apau only alleges that RCO "should have verified that standing of its client to foreclose before filing the Intent to Foreclosure [sic] Notice . . . ." Compl. ¶ 60, ECF No. 46. To the extent Paik-Apau bases her claim on a fiduciary duty stemming from RCO's professional status, the claim fails, as Paik-Apau does not articulate a special relationship giving rise to a fiduciary duty owed by RCO to her.

Nor did RCO, as counsel for Defendants, assume any fiduciary duty owed by Defendants to Paik-Apau, as Defendants owed no fiduciary duty to Paik-Apau:

Lenders generally owe no fiduciary duties to their borrowers. See, e.g., Nymark v. Heart Fed. Sav. & Loan Ass'n, 283 Cal. Rptr. 53, 54 n.1 (Cal. App. 1991) ("The relationship between a lending institution and its borrower-client is not fiduciary in nature."); Miller v. U.S. Bank of Wash., 865 P.2d 536, 543 (Wash. App. 1994) ("The general rule . . . is that a lender is not a fiduciary of its borrower."); Huntington Mortg. Co. v. DeBrota, 703 N.E.2d 160, 167 (Ind. App. 1998) ("A lender does not owe a fiduciary duty to a borrower absent some special circumstances."); Spencer v. DHI Mortg. Co., 642 F. Supp. 2d 1153, 1161 (E.D. Cal. 2009) ("Absent 'special circumstances' a loan transaction 'is at arms-length and there is no fiduciary relationship between the borrower and lender.'") (quoting Oaks Mgmt. Corp. v. Super. Ct., 51 Cal. Rptr. 3d 561 (Cal. ...


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