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Lionel Lima, Jr., and v. Deutsche Bank National Trust Company; the Law Office of David B.

April 30, 2013

LIONEL LIMA, JR., AND
BARBARA-ANN DELIZO-LIMA; AND CALVIN JON KIRBY II, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY
SITUATED, PLAINTIFFS,
v.
DEUTSCHE BANK NATIONAL TRUST COMPANY; THE LAW OFFICE OF DAVID B. ROSEN, A HAWAII PROFESSIONAL CORPORATION; DAVID B. ROSEN, INDIVIDUALLY; ET AL., DEFENDANTS.
EVELYN JANE GIBO, INDIVIDUALLY AND ON BEHALF OF
ALL OTHERS SIMILARLY SITUATED, PLAINTIFF,
v.
U.S. BANK NATIONAL ASSOCIATION, AS KNOWN AS U.S. BANK N.A., A NATIONAL BANKING ASSOCIATION; THE LAW OFFICE OF DAVID B. ROSEN, A HAWAII PROFESSIONAL CORPORATION; DAVID B. ROSEN, INDIVIDUALLY; ET AL., DEFENDANTS.



The opinion of the court was delivered by: Susan Oki Mollway Chief United States District Judge

AMENDED ORDER GRANTING DEFENDANTS' MOTIONS TO DISMISS

I. INTRODUCTION.

Before this court are motions to dismiss in two cases that, while not consolidated, raise nearly identical issues. This court therefore considers the motions together, in the interest of efficiency.

The first case arises from alleged conduct relating to the non-judicial foreclosure of property owned by Plaintiffs Lionel Lima, Jr., and Barbara-Ann Delizo-Lima ("the Limas"), as well as property owned by Plaintiff Calvin Jon Kirby II (all three plaintiffs referred to collectively as "the Lima Plaintiffs"). The Lima Plaintiffs are suing Defendant Deutsche Bank and its attorney, Defendant David B. Rosen, in his individual and professional capacity.

The second case arises from alleged conduct relating to the non-judicial foreclosure of Plaintiff Evelyn Gibo's property. Gibo is suing Defendant U.S. Bank and its attorney, Defendant David B. Rosen, in his individual and professional capacity.*fn1

Currently before the court are Deutsche Bank's Motion to Dismiss the Lima Plaintiffs' First Amended Complaint, U.S. Bank's Motion to Dismiss Gibo's First Amended Complaint, and Rosen's Motions to Dismiss the First Amended Complaints in both the Lima and Gibo cases. The court grants all of the motions.

II. BACKGROUND.

A. The Lima Plaintiffs' Action.

1. The Lima Property Foreclosure.

In October 2005, the Limas acquired property in Pearl City ("the Lima Property") subject to a mortgage of $169,000 ("the Lima Mortgage"). Lima First Am. Compl., ECF No. 14-7 ¶¶ 22, 23. On or about January 30, 2009, the Lima Mortgage was assigned to Deutsche Bank. Id. ¶ 28. Shortly thereafter, Deutsche Bank initiated foreclosure proceedings with respect to the Lima Property pursuant to Hawaii Revised Statutes and the power of sale contained in the mortgages. Id. ¶ 30.

As part of the foreclosure proceedings, Deutsche Bank recorded a "Notice of Mortgagee's Intention to Foreclose Under Power of Sale" (the "Lima Notice of Sale") on March 17, 2009.

Id. ¶ 31. The Lima Notice of Sale stated that the Lima Property was being sold "AS IS" and "WHERE IS" and "without covenant or warranty, either express or implied, as to title, possession or encumbrances." The Lima Notice of Sale thus indicated that the Lima Property would be conveyed via a quitclaim deed. Id. ¶ 32.

The Lima Plaintiffs allege that, at the public auction sale, the successful bidder "bid substantially below the market price of the [Lima] Property." Id. ¶ 36. Deutsche Bank provided a limited warranty deed, not the advertised quitclaim deed, to the successful bidder. Id. The Lima Plaintiffs allege that this bidder resold the Lima Property "for approximately $50,000 more than the bid price within less than four months." Id. At the time of the foreclosure, the Limas "owed more than $40,000 to another entity under a second mortgage on the Lima Property."

Id. ¶ 38.

2. The Kirby Property Foreclosure.

In September 2006, Kirby acquired property in Pahoa ("the Kirby Property") subject to a mortgage of $200,000 ("the Kirby Mortgage"). Id. ¶¶ 24, 25. The mortgagee of record on the Kirby Mortgage was Mortgage Electronic Registration Systems, Inc. ("MERS"), an agent or nominee for Deutsche Bank. Id. ¶ 29.

On March 13, 2009, Deutsche Bank recorded a "Notice of Mortgagee's Intention to Foreclose Under Power of Sale" (the "Kirby Notice of Sale"). Id. ¶ 42. The Kirby Notice of Sale was published in the Hawaii Tribune-Herald on January 28, 2009, February 4, 2009, and February 11, 2009. Id. ¶ 45. The Kirby Notice of Sale advertised a public auction scheduled for March 20, 2009, id. ¶ 43, but the auction was delayed until September 18, 2009. Id. ¶ 49. Kirby alleges that Deutsche Bank did not publish a notice of the postponed auction's rescheduled date and time. Id.

3. The Lima Plaintiffs' Allegations Against Deutsche Bank and Rosen.

The Lima Plaintiffs allege that Deutsche Bank's practice of issuing Notices of Sale ("Notices") providing for quitclaim deeds "had the foreseeable effect of discouraging potential buyers and caused the auction prices to be lower than they would have been if the sales had been advertised as conveying the interest in property that [the Lima] Plaintiffs had pledged with the mortgage, i.e., with at least a warranty deed." See, e.g., id. ¶ 35. The Lima Plaintiffs contend that "[a]dvertising sale by quitclaim deed in these circumstances was not reasonably calculated to obtain the best possible price or to give the property owner the best advantage and was therefore a breach of duty by Deutsche Bank." Id. ¶ 40. At the hearing on the present motions on April 22, 2013, the Lima Plaintiffs clarified that this claim was brought against only Deutsche Bank, not Rosen.

The Lima Plaintiffs also allege that Deutsche Bank's postponement of the Kirby Property auction without publication of any notice stating the new date and time was contrary to the Kirby Mortgage's publication requirement and "had the foreseeable effect of limiting and depressing attendance at postponed auctions and causing auction prices to be lower than they would have been if postponement notices had been published." Id. ΒΆ 50. Kirby alleges that Rosen, as an attorney for Deutsche Bank, was "responsible for formulating, implementing, devising, recommending, validating the purported legality of, and/or authorizing" the allegedly unlawful ...


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