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Dean Krakauer and Robbin Krakauer v. Indymac Mortgage Services

February 26, 2013

DEAN KRAKAUER AND ROBBIN KRAKAUER, PLAINTIFFS,
v.
INDYMAC MORTGAGE SERVICES, A DIVISION OF ONEWEST BANK, FSB, A FEDERAL SAVINGS BANK; ONEWEST BANK, FSB; DOES 1-20, DEFENDANTS. INDYMAC MORTGAGE SERVICES, A DIVISION OF ONEWEST BANK, FSB, A FEDERAL SAVINGS BANK; ONEWEST BANK, FSB, COUNTERCLAIMANTS,
v.
DEAN KRAKAUER AND ROBBIN ) KRAKAUER, COUNTERCLAIM DEFENDANTS.



The opinion of the court was delivered by: Alan C. Kay Sr. United States District Judge

ORDER DENYING PLAINTIFFS' MOTION FOR SUMMARY JUDGMENT PURSUANT TO LR 56.1(g) FOR ADMISSION OF MATERIAL FACTS BASE[D] ON NEWLY DISCOVERED EVIDENCE FOR WRONGFUL FORECLOSURE PROCEDURAL BACKGROUND

On October 27, 2009, Dean Krakauer and Robbin Krakauer (collectively, "Plaintiffs") filed a complaint ("Complaint") in this Court against Indymac Mortgage Services and OneWest Bank, FSB ("OneWest"). ECF No. 1. On December 28, 2009, Defendants filed an answer to the Complaint as well as a counterclaim ("Counterclaim") against the Plaintiffs. ECF No. 5.

Plaintiffs filed a First Amended Complaint on July 30, 2010. ECF No. 43. On August 23, 2010, Defendants filed a motion for summary judgment as to both the First Amended Complaint and the Counterclaim ("2010 MSJ"). ECF No. 46. Defendants also filed a Concise Statement of Facts for the 2010 MSJ ("2010 MSJ CSF"). ECF No. 47. Plaintiffs filed an Opposition to the 2010 MSJ on September 28, 2010, but Plaintiffs did not file a concise statement of facts. ECF No. 53. Defendants filed a Response in Support of the 2010 MSJ on November 30, 2010. ECF No. 56. This Court held a hearing on the 2010 MSJ on December 13, 2010 and subsequently issued its "Order Granting Defendants/ Counterclaimants' Motion for Summary Judgment" on December 14, 2010 ("2010 MSJ Order"). ECF No. 57 and 59. On January 6, 2011, the Court issued its "Order Granting Decree of Foreclosure and Appointing Commissioner." ECF No. 64. On June 22, 2012, the Court issued its "Order Requiring Another Foreclosure Sale" because Defendants failed to follow the requirements in the January 6, 2011 order. ECF No. 120.

On January 2, 2013, Plaintiffs filed a "Motion for Summary Judgment Pursuant to LR 56.1(g) for Admission of Material Facts Base[d] on Newly Discovered Evidence for Wrongful Foreclosure and Strike Def[]endant, (Counterclaimant), Onewest Bank, FSB's Memorandum in Opposition" ("Krakauer MSJ"). ECF No. 132. Defendants filed a Memorandum in Opposition to the Krakauer MSJ on January 22, 2013. ECF No. 138. Plaintiffs filed a Motion in Support of the Krakauer MSJ on February 4, 2013. ECF No. 139. Plaintiffs also filed a "Submission for Order of Findings of Fact and Conc[l]usions of Law Under Local Rule 52.1," which asks this Court for a judgment reflecting Plaintiffs' arguments in the Krakauer MSJ. ECF No. 140. The Court determined that this matter could be decided without a hearing under Local Rule 7.2(d). ECF No. 135.

FACTUAL BACKGROUND

In August 2002, Plaintiffs bought a vacant lot located at 71-1620 Puulani Place, Kailua-Kona, Hawai'i, 96740 ("Property"). 2010 MSJ CSF Ex. G at 4, Ex. M.*fn1 On March 31, 2006, in order to build a home on the Property, Plaintiffs executed and delivered a promissory note ("Note") in favor of IndyMac Bank, FSB ("IndyMac"). 2010 MSJ CSF Ex. A, Ex. F, Ex. G at 7. To secure payment on the Note, Plaintiffs executed a mortgage encumbering the Property in favor of IndyMac ("Mortgage"). 2010 MSJ CSF Ex. B. The Mortgage was recorded on April 7, 2006, in the State of Hawai'i Bureau of Conveyances ("Bureau") as Document No. 2006-065052. 2010 MSJ CSF Ex. B.

IndyMac was closed by the United States Office of Thrift Supervision on July 11, 2008, and the Federal Deposit Insurance Corporation ("FDIC") was named Conservator of IndyMac. 2010 MSJ Order at 4 n.5, ECF No. 59; Nicholson v. OneWest Bank, Civ. No. 1:10-CV-0795-JEC/AJB, 2010 WL 2732325, at *4 n.2 (N.D. Ga. Apr. 20, 2010); FDIC Failed Bank Information, http://www.fdic.gov/bank/individual/failed/IndyMac.html (last visited on Feb. 20, 2013). On March 19, 2009, the FDIC completed the sale of IndyMac to OneWest, and almost all of IndyMac's deposits were transferred to OneWest. Id.

At some point in time subsequent to IndyMac's closure, the FDIC as Receiver for IndyMac assigned Plaintiffs' Mortgage to OneWest ("OneWest Assignment").*fn2 2010 MSJ CSF Ex. C, Plntfs.' Mtn. to Dismiss Ex. A. The OneWest Assignment was recorded at the Bureau on July 6, 2010. Id. Erica Johnson-Seck signed the OneWest Assignment as attorney-in-fact for the FDIC as Receiver for IndyMac. Id. The Bureau also has a recorded Assignment of Mortgage from FDIC as Receiver for IndyMac to OneWest that is dated April 14, 2010, which is signed by both Bryan Bly and Chris Jones, each of whom is an attorney-in-fact for the FDIC ("Bly OneWest Assignment"). Plaintiffs' MSJ Ex. 3.

After Plaintiffs executed the Mortgage and Note, Plaintiffs received about $540,000 toward the construction of a house that was subsequently built on the Property. See 2010 MSJ CSF Ex. G at 11-13, 40-42. From August 2008 through April 2009, Plaintiffs made the required payments (many of which were late) under the Note and Mortgage to OneWest. 2010 MSJ CSF Ex. D, Ex. G at 45-46. After April 2009, Plaintiffs failed to make their scheduled payments under the Note and Mortgage. 2010 MSJ CSF Ex. D, Ex. G at 12-13. Consequently, on September 10, 2009, OneWest recorded a "Notice of Mortgagee's Intention to Foreclose Under Power of Sale" at the Bureau. 2010 MSJ CSF Ex. E. Plaintiffs filed a First Amended Complaint to prevent OneWest's non-judicial foreclosure sale, and OneWest filed a counterclaim to establish OneWest's right to foreclose the Mortgage and sell the Property. ECF No. 1, ECF No. 5 at 6-8. OneWest subsequently filed a Motion for Summary Judgment for both Plaintiffs' First Amended Complaint and OneWest's Counterclaim, which this Court granted in December of 2010. ECF No. 59. The Court subsequently issued an order granting decree of foreclosure and appointing a commissioner to sell the Property on June 22, 2012.*fn3 ECF No. 120. Plaintiffs now bring this motion alleging that there is new evidence warranting a reversal of this Court's 2010 MSJ Order and that summary judgment should be entered in Plaintiffs' favor. ECF No. 132.

STANDARD OF REVIEW

The Court construes Plaintiffs' challenge of the 2010 MSJ Order as a FRCP 60(b) motion for reconsideration because Plaintiffs' arguments contesting the validity of OneWest's ownership of the Mortgage and Note were addressed in this Court's 2010 MSJ Order.

A motion for reconsideration must (1) "demonstrate reasons why the court should reconsider its prior decision" and (2) "must set forth facts or law of a strongly convincing nature to induce the court to reverse its prior decision." Hele Ku KB, LLC v. BAC Home Loans Servicing, LP, 873 F. Supp. 2d 1268, 1289

(D. Haw. 2012). The Ninth Circuit has held that reconsideration is appropriate if (1) the district court is presented with "newly discovered evidence," (2) the district court "committed clear error or the initial decision was manifestly unjust," or (3) "if there is an intervening change in controlling law." Nunes v. Ashcroft, 375 F.3d 805, 807 (9th Cir. 2004). "Whether or not to grant reconsideration is committed to the sound discretion of the court." Navajo Nation v. Confederated Tribes & Bands of the Yakama Indian Nation, 331 F.3d 1041, 1046 (9th Cir. 2003).

FRCP 60(b)(2) provides that a Court may relieve a party from a final judgment or order if a party presents "newly discovered evidence that, with reasonable diligence, could not have been discovered in time to move for a new trial under Rule 59(b)." Under FRCP 60(b)(2), "the moving party must show that the evidence (i) is newly discovered; (ii) could not have been discovered through due ...


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