The opinion of the court was delivered by: J. Michael Seabright United States District Judge
ORDER (1) GRANTING IN PART AND DENYING IN PART DEFENDANT MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC.'S MOTION TO DISMISS, DOC. NO. 57; AND (2) GRANTING DEFENDANT COUNTRYWIDE BANK, FSB'S MOTION TO DISMISS, DOC. NO. 56
On October 11, 2010, Plaintiff Juanita Faye Pualani Lee ("Plaintiff") filed this action in the First Circuit Court of the State of Hawaii alleging state law claims against Defendants Mortgage Electronic Registration Systems, Inc. ("MERS") and Countrywide Bank, FSB ("Countrywide") (collectively "Defendants") stemming from MERS's non-judicial foreclosure of Plaintiff's home located at 954 Alewa Drive, Honolulu, Hawaii 96817 (the "subject property"). On November 19, 2010, MERS removed the action to this court.
On January 3, 2011, the Judicial Panel on Multidistrict Litigation transferred the lawsuit to the United States District Court for the District of Arizona ("MDL Court") for inclusion in the consolidated MERS proceedings pending there. On October 3, 2011, the MDL Court remanded to this court a claim against Countrywide for "common law contract damages," and a claim against Defendants seeking an "accounting." After Defendants filed Motions to Dismiss, the court allowed Plaintiff to file a First Amended Complaint ("FAC") clarifying these claims.
Currently before the court are Countrywide's and MERS's Motions to Dismiss, in which they argue that the FAC fails to state a claim upon which relief can be granted. Based upon the following, the court GRANTS in part and DENIES in part MERS's Motion to Dismiss, and GRANTS Countrywide's Motion to Dismiss.
As alleged in the FAC, on or about July 25, 2007, Plaintiff entered into a mortgage loan transaction with Aegis Wholesale Corporation ("Aegis") for $728,000 to purchase the subject property. Doc. No. 52, FAC ¶ 6. The mortgage describes that MERS "is a separate corporation that is acting solely as a nominee for [Aegis] and [Aegis'] successors and assigns. MERS is the mortgagee under this Security Instrument." Doc. No. 1-1, Compl. Ex. 2 at 2.*fn1
Aegis filed for Chapter 11 bankruptcy two weeks after making the loan to Plaintiff. Doc. No. 52, FAC ¶ 9. On December 18, 2008, MERS, as nominee for Aegis, asserted that Plaintiff was in default on her mortgage and filed a Notice of Mortgagee's Intention to Foreclose Under Power of Sale ("Notice of Foreclosure"), setting an auction for February 6, 2009. Id. ¶ 8; Doc. No. 1-1, Compl. Ex. 3. The FAC asserts that prior to the Notice of Foreclosure, Plaintiff's lender failed to provide "notice of default, notice of the right to cure, notice of acceleration, and notice of the invocation of the power of sale." Doc. No. 52, FAC ¶ 8. The FAC further asserts that MERS had no authority and/or capacity to foreclose on the subject property given Aegis' bankruptcy, which terminated MERS's rights as a nominee under the mortgage as a matter of law. Id. ¶ 10.
The Notice of Foreclosure was signed by "Jason Cotton," who allegedly falsely purported to be the "Assistant Secretary" of MERS, and was notarized by "Hillary Cotton," who allegedly knew that he did not hold such position. Id. ¶ 8; Doc. No. 1-1, Compl. Ex. 3 at 2. The Notice of Foreclosure instructed that the successful bidder "shall pay at least 10% of the highest successful bid price" at the auction, and pay the remaining balance "no later than the 21st day following sale." Doc. No. 1-1, Compl. Ex. 3 at 1; see also Doc. No. 52, FAC ¶ 11.
Countrywide won the auction with a bid of $495,000, and on March 6, 2009, MERS transferred the subject property to Countrywide via a Mortgagee's Quitclaim Deed. Doc. No. 52, FAC ¶ 15; Doc. No. 1-1, Compl. Ex. 6. The FAC asserts that the Quitclaim Deed was signed for MERS by "Kevin A. Durham," who falsely purported to be "Assistant Secretary" of MERS, and was falsely notarized in San Diego County. Doc. No. 52, FAC ¶ 15.
Plaintiff subsequently refused to vacate the subject property, which resulted in Countrywide filing a Complaint for Ejectment in the First Circuit Court of the State of Hawaii on April 1, 2009. Id. ¶ 16; Doc. No. 1-1, Compl. Ex. 8. Countrywide obtained an interim Writ of Ejectment and took possession of the subject property, but ultimately voluntarily dismissed the action without prejudice. Doc. No. 52, FAC ¶ 17. On August 17, 2009, Countrywide transferred the subject property to a third party for $560,000. Id. ¶ 18; Doc. No. 1-1, Compl. Ex. 11.
On October 11, 2010, Plaintiff filed this class action in the First Circuit Court of the State of Hawaii alleging six state law claims against Defendants. On November 19, 2010, MERS removed the action to this court.
On January 3, 2011, the Judicial Panel on Multidistrict Litigation transferred the action to the MDL Court for inclusion in the consolidated MERS proceedings pending there. On October 3, 2011, the MDL Court remanded Count II of the Complaint, titled "Common Law Contract Damages Against MERS," and part of Count VI, titled "Accounting by MERS and by Countrywide" (to the extent unrelated to the formation and/or operation of the MERS system) to this court.
Defendants filed Motions to Dismiss the Complaint, and in the course of briefing those motions (and in particular, the effect of Aegis' bankruptcy on MERS's ability to foreclose), Defendants asserted that the mortgage loan was transferred to Countrywide prior to Aegis' bankruptcy. See Doc. No. 46. In light of this assertion, the court (1) denied the Motions to Dismiss as moot and without prejudice to refiling by agreement of the parties, and (2) granted Plaintiff leave to file an amended complaint asserting claims within the scope of those remanded by the MDL Court.
On March 19, 2012, Plaintiff filed her FAC, asserting a claim against MERS titled "Contract Collection Damages Against MERS," and a claim against Defendants titled "Accounting by MERS and by Countrywide." On April 19, 2012, Defendants filed their Motion to Dismiss. Plaintiff filed an Opposition on June 4, 2012, ...