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Miller v. Bank of New York Mellon

Intermediate Court of Appeals of Hawaii

August 23, 2013

KAREN SUE MILLER, Plaintiff-Appellant,
v.
BANK OF NEW YORK MELLON fka BANK OF NEW YORK AS TRUSTEE FOR THE CERTIFICATE HOLDERS OF CWMBS, INC., CHL MORTGAGE PASS-THROUGH TRUST 200 6-8 MORTGAGE PASS-THROUGH CERTIFICATES SERIES 2006-8, AND MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., Defendants-Appellees

NOT FOR PUBLICATION IN WEST'S HAWAII REPORTS OR THE PACIFIC REPORTER

APPEAL FROM THE CIRCUIT COURT OF THE FIRST CIRCUIT (CIVIL NO. 09-1-1604).

Gary Victor Dubin and Frederick J. Arensmeyer for Plaintiff-Appellant.

David B. Rosen (Law Offices of David B. Rosen) for Defendant-Appellee.

Nakamura, C.J., Fujise and Reifurth, JJ.

MEMORANDUM OPINION

Plaintiff-Appellant Karen Sue Miller ("Miller") sought injunctive and declaratory relief in a bid to halt the nonjudicial foreclosure of her interest in her home in Kāne'ohe, Hawai'i. The Circuit Court of the First Circuit ("Circuit Court")[1], however, granted summary judgment on Miller's complaint and on July 30, 2010, issued judgment in favor of Defendants-Appellees Bank of New York Mellon, formerly known as Bank of New York, as Trustee for the Certificateholders of CWMBS, Inc. CHL Mortgage Pass-Through Trust 2006-8 Mortgage Pass-Through Certificates Series 2006-8 ("BONY Mellon") and Mortgage Electronic Registration Systems, Inc. ("MERS") (collectively, "Defendants") .

Miller appeals from the "Findings of Fact and Conclusions of Law; Order Granting Defendants [BONY Mellon] and [MERS's] Motion for Summary Judgment" and the "Judgment" entered by the Circuit Court on July 30, 2010. We affirm.

I. Background

A. Complaint

Miller filed the Complaint on July 10, 2009, alleging as follows:

Miller resides at 45-002 Kuhonu Place in Kāne'ohe ("Property"). BONY Mellon functions as a trustee for CWMBS, Inc. ("CWMBS"), which "issued securities ... in the form of either collateralized mortgage obligations (CMOs) or collateralized debt obligations (CDOs) or other form of exotic investment vehicle

On or about March 1, 2006, Miller entered into a residential mortgage loan agreement with Countrywide Home Loans, Inc. ("Countrywide"). On or about May 19, 2009, Miller received a Notice of Mortgagee's Intention to Foreclose Under Power of Sale ("MERS Notice"), which claimed that the Property was scheduled to be sold at a public auction on July 17, 2009. The MERS Notice claimed that MERS was the nominee of BONY Mellon and, as mortgagee, was instituting the sale of the Property.

Miller claimed that her mortgage

was sold, in parsed fashion by the original lender (Countrywide), for the purpose of . . . serving as collateral for and being assigned to one or more tranches within a special or exotic investment vehicle (SIV) known as a collateralized mortgage obligation (CMO), collateralized debt obligation (CDO), or other form of mortgage-backed security (MBS) and/or for the purpose of being assigned to one or more credit default swaps (CDS). The securitized loan trust into which [Miller's] loan was placed is, on information and belief, collateralized by, inter alia, hundreds if not thousands of other mortgage obligations which have been assigned to one or more tranches within the SIV in addition to other collateral. Further on information and belief, the interest in [Miller's] mortgage loan is or may be owned by the unnamed certificateholders of the SIV.

She further alleged:

The securitized trust into which [Miller's] mortgage loan was placed is required, as a matter of Federal law, to be protected with various forms of credit enhancements or insurances which insure against the risk of borrower default, the premiums of which are paid at least in part by the borrower and with no recourse against the borrower even upon default. As such, there may not be any default which would give rise to a foreclosure action and sale, as [Miller's] loan obligation may have been liquidated in whole or in part through the payment of benefits through one or more of the credit enhancements available to the securitized mortgage loan trust.

Miller also alleged that Defendants failed to engage in good-faith loss-mitigation efforts with her prior to foreclosing, thereby precluding foreclosure; the MERS Notice fails to comply with Hawaii Revised Statutes ("HRS") § 667-5 because any sale scheduled must be made by a party "with authority by the power to act"; MERS's attempt to foreclose violated its contract with its servicers; and, due to the severance of ownership and possession of the Note and Mortgage, "Defendants are legally precluded from foreclosing on the Property unless and until they can demonstrate full legal standing to do so."

The Complaint asserted two claims, seeking (1) emergency temporary and permanent injunctive relief to halt the foreclosure process and (2) a declaration that Defendants do not have ...


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