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Lawrence Crilley and Marcy Koltun-Crilley v. Bank of America

April 23, 2013


The opinion of the court was delivered by: Leslie E. Kobayashi United States District Judge


On January 23, 2013, Defendant Bank of America, N.A., on its own behalf and as successor-by-merger to BAC Home Loans Servicing, LP ("Defendant") filed the instant Motion For Summary Judgment Or In The Alternative Partial Summary Judgment ("Motion"). Plaintiffs Lawrence Crilley and Marcy Koltun-Crilley ("Plaintiffs") filed their memorandum in opposition on March 15, 2013, and Defendant filed its reply on March 25, 2013. This matter came on for hearing on April 8, 2013. Appearing on behalf of Defendant was Patricia McHenry, Esq., and appearing on behalf of Plaintiffs was James Fosbinder, Esq. After careful consideration of the Motion, supporting and opposing memoranda, and the arguments of counsel, Defendant's Motion is HEREBY GRANTED.


The relevant facts and procedural background of this case are set forth in this Court's April 26, 2012 Order Granting in Part and Denying in Part Defendant's Motion to Dismiss Complaint Filed on January 5, 2012. 2012 WL 1492413 ("4/26/12 Order").*fn1 The Court will therefore not repeat them here.

I. Motion

In the instant Motion, Defendant argues that the Court should grant summary judgment as to both of the claims in the Plaintiffs' Complaint. The Complaint alleges two claims: negligence ("Count I") and unfair and deceptive acts and practices ("UDAP") pursuant to Haw. Rev. Stat. § 480--2 ("Count II"). As to the negligence claim (Count I), Defendant argues that it owed Plaintiffs no common law duty and, even if a duty existed, there was no breach because Defendant offered Plaintiffs three separate loan modifications.

Defendant notes that lenders generally owe no duty to borrowers when originating mortgage loans, and similarly owe no duty to modify a borrower's loan. [Mem. in Supp. of Motion at 9 (citing Shepherd v. Am. Home Morg. Servs. Inc., 2009 WL 4505925 at *2 (E.D. Cal. Nov. 20, 2009); Ottolini v. Bank of Am., 2011 WL 3652501 (N.D. Cal. Aug. 19, 2011); Argueta v. J.P. Morgan Chase, 2011 WL 6012323 (E.D. Cal. Dec. 1, 2011)).] Defendant argues that the instant case is distinguishable from Ansanelli v. JP Morgan Chase Bank, N.A., because here there are no special circumstances that would give rise to a duty owed to Plaintiffs, as Defendant's review of Plaintiffs' loan modification application was part of its routine duties as a loan servicer. [Id. at 10 (citing Ansanelli, 2011 WL 1134451 (N.D. Cal. Mar. 28, 2011)).]

Defendant argues that this case is more like the Lindsey v. Bank of America, N.A. case, in which this Court rejected the plaintiffs' arguments that the servicer owed a duty of care when it actively engaged in loan modification negotiations. In Lindsey, the Court found that the bank owed no special duty where it offered the plaintiffs a loan modification which they rejected, and plaintiffs did not allege sufficient facts to demonstrate that the defendant acted "beyond the domain of a usual money lender so as to create a duty of care." Lindsey, 2012 WL 5198160 at *9-10 (D. Hawai`i Oct. 19, 2012). Defendant argues that here, similarly, Plaintiffs were offered three permanent loan modification offers and voluntarily declined them all. [Mem. in Supp. of Motion at 13 (citing Defendant's Concise Statement in Supp. of Motion ("Defendant's Concise Statement") at ¶¶ 16-18, 20-23).] Defendant thus argues it owed no duty to Plaintiffs.

Defendant further argues that, even if it owed a duty to Plaintiffs, they cannot show breach and causation. Specifically, Defendant argues that its provision of three separate loan modification offers demonstrates that, even if it owed a duty to Plaintiffs, it did not breach that duty. [Id. at 15.] Further, Defendant argues that Plaintiffs suffered no damages caused by Defendant. Defendant notes that Hawai`i law requires a finding of actual loss or damage in a negligence claim. [Id. at 16 (citing Takayama v. Kaiser Found. Hosp., 82 Hawai`i 486, 498-9, 923 P.2d 903, 915-16 (1996)).] Defendant argues that Plaintiffs' alleged negative credit ratings constitutes an economic loss, a type of damages not recoverable in a claim for negligence. [Id.]

Defendant also argues that Plaintiffs' negligence claim is barred by the doctrine of unclean hands, which states that a party should generally not be allowed to profit from its own misconduct. [Id. at 17 (citing Shin v. Edwin Yee, Ltd., 57 Haw. 215, 231, 553 P.2d 733, 744 (1976)).] In the instant case, Defendant argues, because Plaintiffs intentionally defaulted on their mortgage payment obligations and rejected three separate loan modification offers, they were the sole cause of the alleged injury for which they seek to hold Defendant liable. [Id. at 17- 18.]

As to Plaintiff's UDAP claim (Count II), Defendant argues that no material misrepresentation occurred. Defendant argues that Plaintiffs' claim that Defendant told them that the only way to qualify for a loan modification was to be delinquent on their loan is not actionable. [Id. at 18-19.] Defendant argues that, in any case, Plaintiffs' allegation is essentially a claim that Defendant orally modified the loan agreement to allow Plaintiffs to withhold payments so that they would be eligible for the loan modification. Any such agreement, however, would be subject to the Statute of Frauds and thus require a writing. [Id. at 19 (citing Northern Trust, NA v. Wolfe, 2012 WL 1983339, at *22 (D. Hawai`i 2012)).] Defendant also notes that this district court has held that alleged Home Affordable Modification Program ("HAMP") violations cannot form the basis of a UDAP claim. [Id. (citing Rey v. Countrywide Home Loans, Inc., Civ. No. 11-00143 JMS-KSC, 2012 WL 253137 at *9 (D. Hawai`i Jan. 26, 2012)).]

Defendant further argues that Plaintiffs' UDAP claim must fail because they cannot produce proof of actual damages. It is undisputed that no foreclosure has occurred, and any alleged negative credit reporting does not suffice as injury to Plaintiffs' business or property. [Id. at 20 (citing Haw. Rev. Stat. § 480-13(a)).] Further, Defendant argues, any alleged damages were caused by the Plaintiffs' own decision to decline the three loan modifications offered by Defendant. [Id.]

As such, Defendant urges the Court to grant its Motion and dismiss Plaintiffs' ...

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