United States District Court, D. Hawaii
AMENDED ORDER GRANTING DEFENDANT'S MOTION TO
Derrick K. Watson, United States District Judge.
JPMorgan Chase Bank, N.A. filed a breach of contract claim
against Defendant Stacy Moniz on December 11, 2015, alleging
that Moniz defaulted on a 2005 loan agreement. Dkt. No. 1.
Because this breach of contract claim arises out of the same
transaction or occurrence that is the subject of Moniz's
still-pending state court complaint filed four years ago, it
is a compulsory counterclaim that must be brought, if at all,
in that prior proceeding. Accordingly, the Court GRANTS
Moniz's Motion to Dismiss, but it does so without
prejudice to Chase bringing its breach of contract claim as a
compulsory counterclaim in the state court action. Because
the Court dismisses Chase's Complaint on procedural
grounds, this order does not operate as an adjudication on
State Court Action (Civil No. 11-1-2733-11
April 9, 2012, Moniz and his wife, Bonny Moniz, filed an
Amended Verified Complaint (“AVC”) in the First
Circuit Court for the State of Hawaii (“Circuit Court):
Moniz v. Chase, et al., Civil No. 11-1-2733-11 KTN.
Exh. A, Dkt. No. 10-3. In the AVC, Mr. and Mrs. Moniz allege
various claims, including fraud, unjust enrichment, quiet
title, and declaratory relief. Id. The claims stem
from allegations that certain Mortgage Loan Documents that
the Moniz's executed on November 9, 2005 with Chase's
predecessor-in-interest are void and unenforceable. See
Id. at 30. The AVC defines the “Mortgage Loan
Documents” as including “the Mortgage, the Fixed
Rate Rider, the Note and the Signature Name Affidavit.”
Id. at 4. Among the named defendants in that action
is Chase Home Finance LLC, now JPMorgan Chase Bank, N.A. Dkt.
No. 10-1 at 4.
an entry of default was entered against Chase for failure to
reply in a timely fashion, Chase moved to set aside the
default. Exh. B, Dkt. No. 10-4. By order dated
October 2, 2012, the state court ordered Chase to file its
responsive pleading and “any counterclaims” by
October 4, 2012. Id. at 2. Chase filed its
responsive pleading on October 4, 2012, but did not allege
any counterclaims against Mr. and Mrs. Moniz. Exh. C, Dkt.
April 22, 2014, Chase filed a Motion for Leave to file
Counterclaim and Third Party-Complaint for Foreclosure,
Quantum Meruit, and Equitable Lien, which the state court
denied without prejudice. Exhs. D, E, Dkt. Nos. 10-6, 10-7.
The state court action remains pending.
Federal Court Action (Civil No. 15-00512
December 11, 2015, during the pendency of the state court
action, Chase filed a one-count breach of contract claim in
this Court against Moniz, alleging that Moniz had defaulted
on a 2005 loan that was memorialized by an Interest First
Adjustable Rate Note, the same promissory note referenced in
Moniz's state court action as among the Mortgage Loan
Documents. Dkt. No. 1 (“Complaint”).
Specifically, the Complaint alleges in relevant part:
6. On or around November 9, 2005, Mr. Moniz obtained a $483,
000 loan (“Subject Loan”) from lender PHH
Mortgage Corporation (“PHH”). The Subject Loan
was memorialized by an Interest First Adjustable Rate Note
(“Subject Note”), which was executed by Mr.
Moniz. The Subject Note details Mr. Moniz's repayment
obligations and the consequences that may result from
default. . . .
7. Chase (or its duly-authorized agent) currently possesses
the original Subject Note. The original Subject Note bears a
blank endorsement from PHH. As the bearer of the original
Subject Note, Chase is entitled to enforce the contract.
8. Mr. Moniz made payments on the Subject Note for more than
four years, but has not made any payments on the Subject Note
since on or about March 1, 2010. Mr. Moniz is in default, as
he has failed to make payments as required by the Subject
Note for the past five years and nine months.
¶¶ 6-8 ...