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Miles Y. Matsumura and Valerie A. v. Bank of America

February 10, 2012

MILES Y. MATSUMURA AND VALERIE A. MATSUMURA, PLAINTIFFS,
v.
BANK OF AMERICA, N.A.; AND DOES 1-50. DEFENDANTS.



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

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT BANK OF AMERICA, N.A.'S MOTION TO DISMISS, AND GRANTING LEAVE TO AMEND

I. INTRODUCTION

This action arises from (1) a September 11, 2007 mortgage refinancing transaction in which Plaintiffs Miles and Valerie Matsumura (collectively, "Plaintiffs" or "the Matsumuras") borrowed $479,000 from Defendant Bank of America, N.A., ("BANA"), secured by a promissory note and mortgage on real property located at 3350 Keanu Street, Honolulu, Hawaii 96816 (the "subject property"); and (2) subsequent non-judicial foreclosure proceedings (which were not completed) after Plaintiffs sought to modify their loan.

Plaintiffs filed this action against BANA on August 31, 2011 in the Circuit Court of the First Circuit, State of Hawaii, asserting violations of the Truth in Lending Act ("TILA"), 15 U.S.C. § 1601 et seq., and related state laws. BANA removed the action to this court on October 11, 2011, and filed its Motion to Dismiss soon thereafter, on October 17, 2011. Based on the following, the court GRANTS the Motion in PART and DENIES it in PART, and GRANTS leave to file an Amended Complaint in accordance with this Order.

II. BACKGROUND

A. Factual Background

The Complaint alleges the following relevant facts, which the court assumes are true for purposes of this Motion. See, e.g., Savage v. Glendale Union High Sch., 343 F.3d 1036, 1039 n.1 (9th Cir. 2003).

Plaintiffs, husband and wife, are "seniors."*fn1 Compl. ¶ 3. Plaintiffs own the subject property, and live in it as their principal dwelling. Id. ¶ 6. On September 11, 2007, they refinanced the mortgage on the subject property for $479,000 with BANA as lender and mortgagee. Id. ¶ 7 & Ex. 1. They discovered in 2010, after consulting legal counsel, that "they did not each receive at closing two accurate and complete requisite TILA notices of the right to cancel" but rather received "only one blank-dated copy as set forth in Exhibit 5." Id. ¶ 12. They also allegedly did not receive "accurate and complete good faith estimates or complete TILA disclosures." Id.

Meanwhile, in April 2009, Plaintiffs had "contacted [BANA] seeking a loan modification." Id. ¶ 8. They "were told that they were eligible for a loan modification, but that they must stop paying their mortgage to secure a loan modification." Id. "[A]s a result thereof and in reliance thereon they stopped paying their mortgage." Id. The Complaint also references "a partial summary of the extraordinary mistreatment that the Matsumuras received from [BANA] as they responded to promises of a sizable loan modification." Id. ¶ 11 (referring to Exhibit 4 of the Complaint).*fn2 In turn, Exhibit 4 alleges that in August 2009, Plaintiffs "[c]ontacted [BANA] to apply for [a] loan modification [and were] told to expect documentation in the mail to complete and return for review." Id. Ex. 4. Plaintiffs were "[i]nformed that this process takes at least 6 months - sometimes longer - to complete [and were] [a]ssured that when loan is in modification process - account is put on hold and will not be sent for foreclosure." Id. In January, February, and March 2010, Plaintiffs contacted BANA and all three times were told that "loan modification was still in review." Id.

In April 2010, Plaintiffs were served with a Notice of Mortgagee's Intention to Foreclose Under Power of Sale. Compl. ¶ 9 & Ex. 3. This Notice indicated the non-judicial foreclosure auction was to occur on June 7, 2010. Id. Plaintiffs told a BANA employee they were "shocked" to receive this foreclosure notice, Compl. Ex. 4 at 1, and the employee apparently then told them that their application for loan modification had been denied in January 2010. Id. After many phone calls between Plaintiffs and BANA representatives throughout May and June 2010, Plaintiffs eventually paid approximately $56,000 to bring their loan current. Compl. ¶ 10 & Ex. 4 at 4. As a result, however, they were charged "excessive interest and late penalties, foreclosure costs, and attorneys' fees." Compl. ¶ 10.*fn3

On August 31, 2010, Plaintiffs' counsel sent a letter to BANA notifying it that Plaintiffs were "exercis[ing] their right to cancel" the September 11, 2007 refinancing transaction because of, among other allegations, "numerous [TILA] violations." Id. ¶ 13; Ex. 6. BANA "has continued to refuse to recognize" Plaintiffs' cancellation. Id. ¶ 14. Plaintiffs filed this suit a year later, on August 31, 2011. Doc. No. 1, Ex. 1.

B. Procedural Background

The Complaint alleges four counts entitled: "Wrongful Foreclosure" (Count One); "TILA Rescission" (Count Two); "Promissory Estoppel" (Count Three); and (4) "Chapter 480 Unfair and Deceptive Acts and Practices" (Count Four). Compl. at 4-6. Plaintiffs seek damages that resulted from the past uncompleted foreclosure proceedings, and rescission of the 2007 mortgage transaction.

BANA filed its Motion to Dismiss on October 17, 2011. Doc. No. 5. Plaintiffs filed their Opposition on January 3, 2012, and BANA filed its Reply on January 9, 2012. Doc. Nos. 12 & 13. The Motion was heard on January 25, 2012.

III. STANDARD OF REVIEW

Federal Rule of Civil Procedure 12(b)(6) permits a motion to dismiss a claim for "failure to state a claim upon which relief can be granted[.]"

"To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, ...


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