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Swartz v. City Mortgage, Inc.

United States District Court, D. Hawai'i

November 28, 2012

Burton SWARTZ and Nancy D. Swartz, Plaintiffs,
v.
CITY MORTGAGE, INC.; ABN Amro Mortgage Group, Inc.; American Guardian Financial Group, Inc.; First National Mortgage Services, LLC; John Does 1-10; Jane Roes 1-10; Doe Corporations, Partnerships or Other Entities 1-10, Defendants.

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Robin R. Horner, RRH & Associates, Honolulu, HI, for Plaintiffs.

Cheryl A. Nakamura, Lisa Kay Strandtman, Rush Moore LLP, A Limited Liability Law Partnership, Honolulu, HI, for Defendants.

ORDER GRANTING DEFENDANTS CITI MORTGAGE, INC. AND ABN AMRO MORTGAGE GROUP, INC.'S MOTION FOR SUMMARY JUDGMENT ON ALL CLAIMS AGAINST MOVANTS IN THE COMPLAINT FILED ON NOVEMBER 8, 2010

LESLIE E. KOBAYASHI, District Judge.

On October 3, 2012, Defendants Citi Mortgage, Inc. (" CMI" ) and ABN Amro

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Mortgage Group, Inc. (" ABN" , collectively " Moving Defendants" ) filed their Notice of Re-Filing of Motion for Summary Judgment on All Claims Against Movants in the Complaint Filed on November 8, 2010 (" Notice" ). [Dkt. no. 56.] Defendants originally filed the underlying Motion for Summary Judgment on All Claims Against Movants in the Complaint Filed on November 8, 2010 (" Motion" ) on March 18, 2011. [Dkt. no. 17.] Plaintiffs Burton F. Swartz and Nancy D. Swartz (" Plaintiffs" ) filed their memorandum in opposition to the Motion on May 20, 2011, and the Moving Defendants filed their reply on May 26, 2011. [Dkt. nos. 27, 29.] After the filing of the Notice, this Court gave the parties the opportunity to file supplemental memoranda addressing any changes in the relevant facts or applicable law since the original briefing. [Dkt. no. 57.] Plaintiffs, however, chose not to file a supplemental memorandum in opposition, and therefore the Moving Defendants could not file a supplemental reply. This matter came on for hearing on October 29, 2012. Appearing on behalf of the Moving Defendants was Cheryl Nakamura, 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, the Moving Defendants' Motion is HEREBY GRANTED for the reasons set forth below.

BACKGROUND

Plaintiffs filed the instant action on November 8, 2010 against CMI, ABN, American Guardian Financial Group, Inc. (" American Guardian" ), and First National Mortgage Services, LLC. (" First National" , all collectively, " Defendants" ). The instant case arises from the loan origination and eventual mortgage foreclosure upon Plaintiffs' property. Also on November 8, 2010, Plaintiffs filed a Notice of Pendency of Action stating, inter alia, that the case relates to 75-635 Makapono Place, Kailua-Kona, Hawaii 96740, TMK (3)7-5-016-078 (" the Property" ). [Dkt. no. 4.] Plaintiffs have not filed any evidence that they served their Complaint on any of the Defendants. CMI and ABN, however, appeared in the action and eventually filed an answer on March 4, 2011.[1] [Dkt. no. 16.]

I. Factual Background

Plaintiffs state that they spoke with First National in late 2006 about obtaining a single loan to finance the purchase of the Property. According to Plaintiffs, First National represented that it would arrange one loan with one monthly payment. [Complaint at ¶¶ 13-15.] Plaintiffs state that they " were financially unsophisticated and lacked the ability to negotiate loan terms" and therefore they put their " trust and faith" in First National, and any lenders it worked with, to provide Plaintiffs with " a suitable loan product." [ Id. at ¶ 16.] First National secured a commitment for a thirty-year, fixed conventional loan for Plaintiffs. Plaintiffs state that they entered into the transaction in reliance on the representations that First National made. [ Id. at ¶¶ 17-18.] According to Plaintiffs, they provided First National with a loan application containing accurate information, but First National " prepared a loan application that greatly overstated Plaintiffs [sic] income and assets without Plaintiffs [sic] knowledge or consent." [ Id. at ¶ 19.] Plaintiffs also allege that they did not receive an initial truth-in-lending

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statement within three days of submitting their loan application. [ Id. at ¶ 20.]

The closing for Plaintiffs' loan was scheduled on September 25, 2006. On that day, Plaintiffs expected that the transaction would involve one loan, as they requested. First American, ABN, and American Guardian, however, prepared documents for two loans. According to Plaintiffs, prior to that date, none of the Defendants disclosed to Plaintiffs that the transaction would involve two separate loans. [ Id. at ¶¶ 21-23.] Plaintiffs questioned why they needed two loans instead of one and why the interest rate was higher than the rate they were promised. Plaintiffs state that " Defendants explained that the specific terms did not matter because Plaintiffs were going to refinance within 2 months at no charge into a jumbo loan." [ Id. at ¶ 24.] Plaintiffs signed all of the loan documents that First American, ABN, and American Guardian presented to them, but Plaintiffs allege that First American, ABN, and American Guardian did not explain the documents and did not allow Plaintiffs to read what they were signing. Plaintiffs also claim that, at the time they applied for the loan, they had good credit and should have qualified for a fixed thirty-year loan, which would have been best for Plaintiffs under their financial circumstances. Plaintiffs further allege that they did not receive signed and dated good faith statements in connection with the loans. [ Id. at ¶¶ 26-29.] Plaintiffs also complain that the second loan was not " a fully amortized thirty year loan" and that the combined monthly payments for the first loan and the second loan " substantially exceeded Plaintiffs' gross monthly income in 2005 and 2006." [ Id. at ¶¶ 38-39.]

Plaintiffs acknowledge that CMI's parent acquired ABN. [ Id. at ¶ 31.]

Plaintiffs allege that they experienced " extreme hardship" making their loan payments and asked CMI for a loan modification. CMI represented that it would consider modifying Plaintiffs' loan, but later informed Plaintiffs that the owner of the loan, or loans, would not approve modification. CMI referred the matter to an attorney for foreclosure. At the same time, however, CMI gave Plaintiffs a letter instructing them to submit further financial information to allow CMI to review their loan modification request. [ Id. at ¶¶ 32-37.]

The Complaint alleges the following claims: violations of the Federal Truth-in-Lending Act (" TILA" ), 15 U.S.C. § 1601, et seq., and the Real Estate Settlement Procedures Act (" RESPA" ), 12 U.S.C. § 2601 et seq. (" Count I" ); violation of the Fair Credit Reporting Act (" FCRA" ), 15 U.S.C. § 1681 et seq., (" Count II" ); fraudulent misrepresentation (" Count III" ); breach of fiduciary duty (" Count IV" ); unjust enrichment (" Count V" ); civil conspiracy (" Count VI" ); complaint to quiet title (" Count VII" ); violation of Hawaii Bureau of Conveyances Regulations (" Count VIII" ); mistake; (" Count IX" ); unconscionability (" Count X" ); unfair and deceptive acts or practices (" UDAP" ), in violation of Haw.Rev.Stat. §§ 480-2(a) and/or 481A-3 (" Count XI" ); failure to act in good faith (" Count XII" ); recoupment (" Count XIII" ); negligent and/or intentional infliction of emotional distress (" NIED" , " IIED" and " Count XIV" ); violation of the right to privacy under the Hawai'i Constitution (" Count XV" ); violation of Haw.Rev.Stat. Chapter 667 (" Count XVI" ); violation of the Fair Debt Collection Practices Act (" FDCPA" ), 15 U.S.C. §§ 1692-1692p, as amended (" Count XVII" ); and violations of the Equal Credit Opportunity Act (" ECOA" ), 15 U.S.C. § 1691, et seq., and the Home Mortgage Disclosure Act (" HMDA" ), 12 U.S.C. § 2801, et seq., (" Count XVIII" ).

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The Complaint prays for: a judgment of rescission; statutory, actual, treble, and punitive damages; a temporary restraining order or an injunction; a judgment of recoupment, reimbursement and/or indemnification; and any other appropriate relief.

II. Motion

In connection with the instant Motion, the Moving Defendants state that, on or about September 26, 2006, Plaintiffs applied for a loan to purchase the Property. Plaintiffs applied by telephone through First National, a mortgage broker. [Moving Defs.' Concise Statement in Supp. of Motion (" Defs.' CSOF" ), filed 3/18/11 (dkt. no. 18), Decl. of Defs.' Agent (" Agent Decl." ),[2] at ¶ 4A, Exh. A (Uniform Residential Loan Application— " Loan Application" )).] The purchase price of the Property was $990,000.00. [Agent Decl. at ¶ 4E; Loan Application at 4; Agent Decl., Exh. E (U.S. Department of Housing and Urban Development Settlement Statement— " Settlement Statement" ).]

First National prepared two loan applications on Plaintiffs' behalf, the first for a $625,000.00 loan from ABN at a fixed rate of 7.25%, to be secured by a first mortgage on the Property. [Loan Application at 1.] This loan is the subject of the instant Motion.[3] [Mem. in Supp. of Motion at 2.] ABN " did not obtain any information directly from Plaintiffs, made no representations to Plaintiffs during the loan application process, and did not prepare their loan application." [Agent Decl. at ¶ 5.]

Plaintiffs executed a promissory note dated September 27, 2006 for the loan from ABN (" First Note" ). [ Id. at ¶ 4B, Exh. B.] Plaintiffs also executed a Mortgage dated September 27, 2006 (" First Mortgage" ) in favor of ABN, recorded on October 5, 2006 in the Bureau of Conveyances of the State of Hawai'i (" BOC" ) as Document No. 2006-182768. [Agent Decl. at ¶ 4C, Exh. C] As part of the loan transaction, Plaintiffs both signed: a Truth-in-Lending Disclosure Statement (" TILA Disclosure" ), acknowledging having received and read the disclosure; [Agent Decl. at ¶ 4D, Exh. D; ] the Settlement Statement, which authorized the disbursements indicated therein; [Agent Decl. at ¶ 4E, Settlement Statement at 3; ] and a Notice of Right to Receive a Copy of Your Appraisal [Agent Decl. at ¶ 4F, Exh. F].

On September 1, 2007, ABN was merged into CMI. Plaintiffs' loan was not sold to any other party. [Agent Decl. at ¶ 3.] The Moving Defendants state that CMI is " formerly known as" ABN. [ Id. at ¶ 9.] CMI filed a Petition for Order Regarding Merger in the Land Court, State of Hawai'i (" Land Court" ), on March 17, 2008, and a Land Court judge granted the petition. The petition and order were recorded with the Land Court on March 25, 2008 as order no. 174212. [ Id., Exh. J.]

Prior to the merger, the Moving Defendants informed Plaintiffs, via a letter dated August 10, 2007, that the servicing of their loan with ABN was being transferred to CMI. The letter gave Plaintiffs contact information for ABN and CMI, informed them that the transfer would be effective as of September 1, 2007, and provided Plaintiffs with a payment coupon. [Agent Decl. at ¶ 7, Exh. H.] Plaintiffs thereafter made their mortgage payments to CMI. [Agent Decl. at ¶ 8.]

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Plaintiffs defaulted on the terms of the First Note and First Mortgage by failing to pay the amounts due thereunder when they became due and payable. [ Id. at ¶ 11.] The Moving Defendants emphasize that Plaintiffs do not deny this fact. [Mem. in Supp. of Motion at 3.] Plaintiffs did make numerous requests to modify their loan but, after CMI approved one modification, Plaintiffs failed to sign and return the modification forms. CMI denied other modification requests for various reasons. Plaintiffs never cured their default. [Agent Decl. at ¶ 12.]

The Moving Defendants state that, " [i]n compliance with and pursuant to Haw.Rev.Stat. §§ 667-5 through 667-10 and the terms of the [First] Note and [First] Mortgage, Defendant CMI exercised its right to foreclose on the Property through a nonjudicial foreclosure[.]" [ Id. at ¶ 13.] CMI retained foreclosure counsel, the law firm of Clay Chapman Iwamura Pulice & Nervell (" Clay Chapman" ), in Honolulu. [ Id.; Defs.' CSOF, Decl. of Foreclosure Counsel (" Counsel Decl." ),[4] at ¶¶ 1-2.] Ms. Parker, who is licensed to practice law in the State of Hawai'i, sent Plaintiffs a letter dated July 21, 2010, notifying them of the debt and their right to request debt verification within thirty days. [Agent Decl. at ¶ 14; Counsel Decl. at ¶ 3, Exh. I.] Neither CMI nor Clay Chapman received a request for verification within the required thirty-day period. [Agent Decl. at ¶ 14; Counsel Decl. at ¶ 3.]

The Property was sold to an outside bidder for $508,501.00 at an October 20, 2010 public auction. This was the highest bid at the auction. The required ten percent deposit has been deposited in an escrow account, but no quitclaim deed conveying title to the purchaser has been recorded. [Counsel Decl. at ¶ 6.] The Moving Defendants believe that Plaintiffs filed this action to delay completion of the foreclosure sale. Plaintiffs filed a Notice of Pendency of Action in the BOC, effectively staying the foreclosure proceedings until the resolution of Plaintiffs' claims. [Mem. in Supp. of Motion at 5.]

First, the Moving Defendants argue that Plaintiffs are not financially unsophisticated parties. The Moving Defendants note that, at the time Plaintiffs applied for the loan, Plaintiffs owned three other properties, including the property (valued at $1,300,000.00) that was their personal residence at the time they were purchasing the subject Property, and two rental properties with a combined value of $730,000.00. Plaintiffs owned their residence and one of the rental properties outright, and owed only $36,782.00 on the other rental property, which was valued at $430,000.00. Plaintiffs were also self-employed; their company was called AG Water Hawaii Corporation. [ Id. at 6-7 (citing Loan Application at 2-3).]

The Moving Defendants argue that, as a matter of law, Plaintiffs cannot prevail on any of their federal law claims.

A. Count I— TILA & RESPA

Plaintiffs allege that: ABN failed to disclose certain charges in the TILA Disclosure; the TILA Disclosure included a different rate than Plaintiffs were promised; Defendants did not provide them with all of the disclosures required under TILA; and Defendants did not provide them with a good faith estimate within three days of their loan application, as required by RESPA. [Complaint at ¶ 44.] The Moving Defendants emphasize that they were not a party to the conversations that Plaintiffs had with First National. The Moving Defendants

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made no representations to Plaintiffs other than those in the documents that ABN provided Plaintiffs, including the TILA Disclosure. [Agent Decl. at ¶ 5, Exh. D.]

The Moving Defendants argue that TILA rescission is not available because the purpose of Plaintiffs' loan was to purchase the Property. [Mem. in Supp. of Motion at 8-9 (some citations omitted) (citing 15 U.S.C. §§ 1635(a) and (e)(1), § 1602(w); Reg. Z, 12 C.F.R. § 226.23(f)(1), § 226.2(a)(24)).] Even if rescission were available for purchase loans, Plaintiffs' rescission claim is time-barred because Plaintiffs filed suit more than three years after entering into the loan. [ Id. at 9 (some citations omitted) (citing 15 U.S.C. § 1635(f); 12 C.F.R. § 226.23(a)(3)).] In addition, Plaintiffs failed to bring their TILA damages claims within one year of entering into the loan. [ Id. (some citations omitted) (citing 15 U.S.C. § 1640(e)).]

The Moving Defendants argue that the RESPA claim fails because RESPA does not provide for a private right of action for failure to provide a good faith estimate. [ Id. at 10 (some citations omitted) (citing 12 U.S.C. § 2604(c)).] Further, Plaintiffs failed to bring their RESPA claim within the one-year statute of limitations in 12 U.S.C. § 2614, and they have not asserted any basis for equitable tolling. [ Id. ]

B. Count II— FCRA

The Moving Defendants acknowledge that they are providers of information to credit reporting agencies under the FCRA and that they regularly reported credit information about Plaintiffs' mortgage payments. [ Id. ] The Moving Defendants argue that, under the FCRA, lenders have a duty to report negative information to credit reporting agencies. [ Id. at 11 (citing 15 U.S.C. § 1681s-2(a)(5), (a)(7)(G)(i)).] Plaintiffs do not allege that the Moving Defendants reported the incorrect debt amount, nor do they claim that the Moving Defendants incorrectly reported that Plaintiffs were in default. Thus, Plaintiffs cannot prove an FCRA claim because the Moving Defendants' reports were accurate. [ Id. at 11-12.]

C. Count XVII— FDCPA

Plaintiffs allege that they requested that Defendants verify the debt, but Defendants failed to respond and failed to cease collection efforts pending verification, as required by the FDCPA. [Complaint at ¶¶ 140-42.] The Moving Defendants, however, emphasize that CMI did provide Plaintiffs with a July 21, 2010 letter, giving notice of its intent to collect and that Plaintiffs had the right to request verification of the debt, but neither CMI nor its counsel received a timely request for verification. [Agent Decl. at ¶ 14; Counsel Decl. at ¶ 3, Exh. I.] Plaintiffs' counsel sent a letter dated October 24, 2010 to Ms. Parker. The letter, inter alia, requested verification of the debt. [Counsel Decl., Exh. N at 3.] The Moving Defendants argue that they were entitled to ignore this letter because it was not a timely request for verification. [Mem. in Supp. of Motion at 12-13 (citations omitted).]

D. Count XVIII— ECOA (Rea B) & HMDA (Rea C)

Plaintiffs alleged that ABN violated the ECOA and the HMDA because it did not obtain a written loan application and did not provide Plaintiffs with a signed and dated loan application. They also allege that ABN violated the ECOA by failing to notify Plaintiffs that a copy of the appraisal would be provided to them upon request. [Complaint at ¶¶ 146-47.] The Moving Defendants argue that these claims fail as a matter of law. First, the HMDA does not provide for a private right

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of action. Second, the ECOA does not require that the written application which a creditor accepts for a home purchase loan must be signed or that the creditor provide the applicant with a signed application. [Mem. in Supp. of Motion at 13-14 (citing 12 U.S.C. § 2801 et seq.; Reg. B, 12 C.F.R. § 202.4(c)).] The Moving Defendants assert that they did obtain a written loan application from Plaintiffs through their mortgage broker, First National. [ Id. at 14; Loan Application.] Third, Plaintiffs did receive notice of their right to request a copy of the appraisal. [Agent Decl., Exh. F.]

Even if Plaintiffs could allege valid claims under the ECOA, they would be time-barred because Plaintiffs failed to bring them within two years of the date of the alleged violation, which occurred at the closing of the loan. [Mem. in Supp. of Motion at 14 (citing 12 C.F.R. § 202.16(b)(2)).]

E. Supplemental Jurisdiction

The Moving Defendants argue that, because they are entitled to summary judgment on all of Plaintiffs' federal law claims, this Court should decline to exercise supplemental jurisdiction over Plaintiffs remaining state law claims. [ Id. ] In the alternative, the Moving Defendants argue that each of the state law claims fail as a matter of law.

1. Count III— Fraudulent Misrepresentation

Plaintiffs allege that Defendants misrepresented or concealed material information from Plaintiffs during the loan application process. [Complaint at ¶¶ 55-57.] The Moving Defendants argue that they did not make any representations to Plaintiffs other than what is stated in the terms of the First Note and First Mortgage, and Plaintiffs have not alleged that those documents contain misrepresentations. [Mem. in Supp. of Motion at 15.] Further, the Complaint does not meet the specificity requirements for pleading fraud claims. The Moving Defendants also emphasize that representations based on future events cannot form the basis of a fraud claim. Finally, they note that the elements of fraudulent misrepresentation must be established by clear and convincing evidence, and they assert that Plaintiffs cannot meet this burden. [ Id. at 17-18.]

2. Count IV— Breach of Fiduciary Duty

The Moving Defendants argue that this claim fails because ABN only acted as a lender of funds, and lenders generally owe no fiduciary duties to their borrowers. [ Id. at 18.]

3. Count V— Unjust Enrichment

Plaintiffs essentially argue that Defendants were unjustly enriched by receiving fees that Defendants failed to fully disclose to Plaintiffs and by receiving fees from third parties. [Complaint at ¶¶ 68-71.] The Moving Defendants argue that the TILA Disclosure and the Settlement Statement set forth all of the fees associated with Plaintiffs' loan. [Agent Decl., Exhs. D & E.] The Moving Defendants argue that there was nothing improper about those fees. Plaintiffs have not identified what payments Defendants allegedly received from third parties, but the Moving Defendants deny receiving any such payments. Further, even if Defendants did receive payments from third parties, the benefit to Defendants would not be at Plaintiffs' expense. [Mem. in Supp. of Motion at 19.]

4. Count VI— Civil Conspiracy

Plaintiffs allege that Defendants conspired among themselves to defraud Plaintiffs. [Complaint at ¶¶ 74-75.] The Moving Defendants reiterate that Plaintiffs' fraud claims fail, and therefore the conspiracy

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to defraud claim must also fail. Moreover, Plaintiffs do not allege any specific facts showing a conspiracy between Defendants. The Moving Defendants state that ABN made the loan solely with Plaintiffs and did not receive any other economic benefit from Plaintiffs other than what is set forth in the First Note and First Mortgage. [Mem. in Supp. of Motion at 20.]

5. Count VII— Complaint to Quiet Title

The Moving Defendants argue that this is a prayer for relief rather than a cause of action; Plaintiffs seek to rescind their loan and to have their title to the Property restored clear of any interest from the First Mortgage. The Moving Defendants reiterate that TILA rescission no longer applies, and they argue that any allegations in Count VII based on another party holding the loan are incorrect because there was no sale or transfer of the loan. [ Id. (citing Agent Decl. at ¶ 3).]

6. Count VIII— Violation of Hawaii BOC Regs.

Plaintiffs allege that the Hawai'i Administrative Rules require that any transfer of a mortgage interest be recorded. [Complaint at ¶ 88.] The Moving Defendants argue that Haw. Admin. R. § 16-178-2 only requires that, if a transfer of an interest in real property is recorded, it is subject to a special mortgage recording fee (" SMRF" ). ABN, however, never transferred its interest in Plaintiffs' mortgage. The Moving Defendants also argue that the Hawai'i Administrative Rules do not provide for a private right of action. [Mem. in Supp. of Motion at 21.]

In addition, the Moving Defendants contend that the filing of the petition and order regarding the merger was sufficient notice of the merger of ABN with CMI. A title search of the Property will reflect the merger. [Agent Decl. at ¶ 10, Exh. K at 8.] Even if the recording of an assignment of Plaintiffs' mortgage to CMI were required, Haw.Rev.Stat. § 502-83 provides that the effect of the failure to record an assignment is to render the assignment void against subsequent purchasers, lessees, or mortgagees who acted in good faith and paid valuable consideration without notice of the unrecorded assignment. Plaintiffs do not fall within those categories. [Mem. in Supp. of Motion at 21.] Plaintiffs also had notice of the assignment. [ Id. at 21-22 (citing Agent Decl. at ¶¶ 7-8, Exh. H).]

7. Count IX— Mistake

Plaintiffs allege that, if Defendants' actions in the loan origination did not rise to the level of fraud, then the parties entered into the contract based on mutual mistake, entitling Plaintiffs to rescission. [Complaint at ¶ 96.] The Moving Defendants argue that Plaintiffs cannot state a viable claim of mistake against them because all of the terms of Plaintiffs' loan are clearly set forth in the First Note and First Mortgage. [Mem. in Supp. of Motion at 22.]

8. Count X— Unconscionability

Plaintiffs allege that they did not understand their loans or the true terms of the loans, and therefore the terms of the notes and mortgages are unconscionable, entitling Plaintiffs to rescission. [Complaint at ¶¶ 99-100.] The Moving Defendants argue that Plaintiffs have not identified what specific terms or conditions are allegedly unconscionable, nor have Plaintiffs established any factual basis to support this claim. [Mem. in Supp. of Motion at 22.]

9. Count XI— UDAP

The Moving Defendants argue that any alleged UDAP violations associated with the origination of Plaintiffs' loan are time-barred because Haw.Rev.Stat. § 480-24 sets forth a four-year statute of limitations period. The acts that Plaintiffs complain of occurred in September 2006, but they

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did not file this action until November 8, 2010. Even assuming arguendo that Plaintiffs' UDAP claims are not time-barred, Plaintiffs have not provided any evidence that the documents which ABN provided to Plaintiffs contain any false statements. [ Id. at 23.]

10. Count XII— Failure to Act in Good Faith

The Moving Defendants argue that Plaintiffs have not alleged any specific conduct by the Moving Defendants to support this claim. ABN acted solely as the lender, and the terms of the loan are clearly set forth in the First Note and First Mortgage. CMI only dealt with Plaintiffs in the capacity of an entity that merged with Plaintiffs' lender. The Moving Defendants therefore argue that Plaintiffs have not, and cannot, allege any bad faith by the Moving Defendants. [ Id. at 24.]

11. Count XIII— Recoupment

The Moving Defendants argue that, under TILA, recoupment is only available as a defense to an action to collect a debt, [ id. at 24 (some citations omitted) (citing 15 U.S.C. § 1640(e)),] and Plaintiffs' allegations do not support a claim for equitable recoupment. [ Id. ]

12. Count XIV— NIED/IIED

The Moving Defendants argue that Plaintiffs' emotional distress claims, which are based on Defendants' alleged actions and omissions in September 2006, are time-barred because Plaintiffs failed to bring this action within two years of the alleged actions and omissions. [ Id. at 24-25 (citing Haw.Rev.Stat. § 657-7)).] The Moving Defendants also reiterate that they made no representations to Plaintiffs other than those contained in the First Note, First Mortgage, and the TILA Disclosure. [ Id. at 25.]

13. Count XV— Violation of the Right to Privacy

Plaintiffs allege that Defendants violated their right to privacy under the Hawai'i Constitution by providing private financial information to non-affiliated third-parties to sell asset-backed certificates, shares or bonds. [Complaint at ¶¶ 131-32.] The Moving Defendants argue that the Hawai'i Constitution does not mandate notice to Plaintiffs of such disclosures. Moreover, the Moving Defendants did not disclose any of Plaintiffs' private information as part of the sale of asset-backed certificates, shares or bonds. [Mem. in Supp. of Motion at 25 (citing Agent Decl. at ¶ 18).] The Moving Defendants also point out that ABN provided Plaintiffs with a privacy notice at closing. [ Id. (citing Agent Decl. at ¶ 4H, Exh. L).] Finally, to the extent that this claim is based on information that the Moving Defendants provided to credit reporting agencies regarding the status of Plaintiffs' loan, Plaintiffs do not have a right to privacy in any of that information. [ Id. ]

14. Count XVI— Violation of Chapter 667

Plaintiffs allege that the Moving Defendants violated Chapter 667 because the Moving Defendants were not represented by an attorney in the foreclosure process, did not properly publish notice of their intent to foreclose, and/or did not provide Plaintiffs with proper notice of the foreclosure sale. [Complaint at ¶ 136.] The Moving Defendants argue that these claims are frivolous. Their foreclosure counsel was Clay Chapman; [Agent Decl. at ¶ 13; Counsel Decl. at ¶ 2; ] they recorded a Mortgagee's Affidavit of Foreclosure Sale under Power of Sale (" Foreclosure Affidavit" ) in the BOC as document no. 2010-176632; [Counsel Decl. at ¶ 4, Exh. M; ] and the Foreclosure Affidavit included evidence of personal service on Plaintiffs,

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posting of notice on the Property, and publication of notice in the Honolulu Star-Advertiser on September 14, 21, and 22, 2010 [Foreclosure Aff., Exhs. B, F, G]. The Moving Defendants therefore argue that the foreclosure was in full compliance with the law.

III. Memorandum in Opposition

In their memorandum in opposition, Plaintiffs first contend that the Court should deny the Motion because there are numerous issues of disputed material fact and because Plaintiffs need to conduct further discovery, which they believe ...


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