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Agbannaoag v. Ocwen Loan Servicing, LLC

United States District Court, D. Hawaii

October 25, 2016

MERLITA AGBANNAOAG; JERRY AGBANNAOAG, Plaintiffs,
v.
OCWEN LOAN SERVICING, LLC; DEUTSCHE BANK NATIONAL TRUST COMPANY; JOHN DOES 1-10; JANE DOES 1-10; DOE PARTNERSHIPS 1-10; DOE CORPORATIONS 1-10; DOE ENTITIES 1-10; and DOE GOVERNMENTAL UNITS 1-10, Defendants.

         ORDER GRANTING DEFENDANTS OCWEN LOAN SERVICING, LLC AND DEUTSCHE BANK NATIONAL TRUST COMPANY'S REQUEST FOR THE COURT TO TAKE JUDICIAL NOTICE (ECF No. 8-2) and GRANTING DEFENDANTS OCWEN LOAN SERVICING, LLC AND DEUTSCHE BANK NATIONAL TRUST COMPANY'S MOTION TO DISMISS (ECF No. 8)

          Helen Gillmor United States District Judge

         Plaintiffs Merlita Agbannaoag and Jerry Agbannaoag have filed a Complaint against Ocwen Loan Servicing, LLC and Deutsche Bank National Trust Company.

         Plaintiffs claim that they executed an Adjustable Rate Note in favor of AmeriFund Financial, Inc. to obtain a Loan to purchase real property on the island of Maui. The Loan was secured by a Mortgage, which was recorded against the real property. Plaintiffs claim that the Note and Mortgage were assigned to Defendant Deutsche Bank National Trust Company[1] and that Defendant Ocwen Loan Servicing, LLC is the servicer.

         Plaintiffs' Complaint alleges claims against both Defendants.

         Count I is alleged against both Defendants for breach of implied covenant of good faith and fair dealing.

         Count II is missing from the Complaint. The Complaint skips paragraphs 68-74. The Prayer for Relief in Plaintiffs' Complaint states that Count II is alleged against both Defendants for tortious breach of good faith and fair dealing.

         Count III is alleged against both Defendants for unfair and deceptive acts or practices.

         No additional Counts are alleged in the Complaint. The Complaint skips paragraphs 88-99. The Prayer for Relief in Plaintiffs' Complaint states that Count IV is alleged against both Defendants for tortious interference with a business relationship and that Count V is for violations of the Fair Debt Collection Practices Act.

         Defendants filed a Motion to Dismiss all claims pursuant to Federal Rule of Civil Procedure 8, 9, and 12(b)(6).

         Defendants have also filed a Request for the Court to Take Judicial Notice in Support of their Motion to Dismiss.

         Defendants' Request for the Court to Take Judicial Notice (ECF No. 8-2) is GRANTED.

         Defendants' Motion to Dismiss (ECF No. 8) is GRANTED. Plaintiffs are permitted LEAVE TO FILE A MOTION TO AMEND their Complaint consistent with this Order.

         PROCEDURAL HISTORY

         On May 24, 2016, Plaintiffs Merlita Agbannaoag and Jerry Agbannaoag filed a Complaint in the Circuit Court of the Second Circuit, State of Hawaii. (Complaint attached as Ex. 1 to Defendants' Notice of Removal, ECF No. 1).

         On July 14, 2016, Defendants Ocwen Loan Servicing, LLC and Deutsche Bank National Trust Company removed the state court action to the United States District Court for the District of Hawaii. (ECF No. 1).

         On July 20, 2016, Defendants filed a MOTION TO DISMISS and a REQUEST FOR JUDICIAL NOTICE IN SUPPORT OF MOTION TO DISMISS PLAINTIFFS' COMPLAINT. (ECF Nos. 8, 8-2).

         On July 28, 2016, the Court issued a briefing schedule. (ECF No. 10). Plaintiffs' Opposition was due on or before August 17, 2016. (Id.)

         Plaintiffs did not file their Opposition on or before August 17, 2016.

         On September 2, 2016, Plaintiffs filed PLAINTIFF'S EX PARTE MOTION FOR LEAVE TO FILE A MEMORANDUM IN OPPOSITION TO DEFENDANT'S MOTION TO DISMISS PLAINTIFF'S COMPLAINT, claiming excusable neglect. (ECF No. 12).

         On September 6, 2016, the Court issued a Minute Order granting Plaintiffs' Request to file their Opposition. (ECF No. 13). The Court also provided Defendants with additional time to file their Reply. (Id.)

         On September 16, 2016, Plaintiffs filed their MEMORANDUM IN OPPOSITION TO DEFENDANT'S MOTION TO DISMISS PLAINTIFF'S COMPLAINT. (ECF No. 16). The Opposition consisted of two and a half pages. The contents were limited to an argument that Hawaii state procedural law applied rather than the Federal Rules of Civil Procedure. (Id.)

         On September 30, 2016, Defendants filed DEFENDANTS' REPLY IN SUPPORT OF MOTION TO DISMISS PLAINTIFF'S COMPLAINT. (ECF No. 17).

         On October 17, 2016, a hearing was held on Defendants' Motion to Dismiss.

         BACKGROUND

         The Complaint states that on February 1, 2005, Plaintiffs Merlita and Jerry Agbannaoag (“Plaintiffs”) executed an Adjustable Rate Note in the amount of $395, 000 to AmeriFund Financial, Inc. to purchase real property on the island of Maui. (Complaint at ¶ 3, ECF No. 1; see Adjustable Rate Note dated February 1, 2005, attached as Ex. B to Defendants' Request for Judicial Notice at pp. 14-18, ECF No. 8-4).

         The Complaint asserts that repayment of the Note was secured by a Mortgage, which was recorded against the real property purchased by Plaintiffs. (Complaint at ¶¶ 3, 42, ECF No. 1; Mortgage attached to Plaintiff's Complaint, recorded in the State of Hawaii Bureau of Conveyances on February 10, 2005, Doc. No. 2005-027341, at pp. 31-44, ECF No. 1).

         Plaintiffs allege that the Note and Mortgage were assigned to Defendant Deutsche Bank National Trust Company (“Defendant Deutsche Bank”). (Complaint at ¶¶ 4, 43, ECF No. 1; Assignment of Mortgage, attached as Ex. B to Defendants' Request for Judicial notice at p. 45, ECF No. 8-4). Plaintiffs assert that Defendant Ocwen Loan Servicing, LLC (“Defendant Ocwen Loan Servicing”) is the servicer of their Loan and is responsible for collecting payments and applying the payments to their debt. (Complaint at ¶¶ 5, 18, 42, ECF No. 1).

         Plaintiffs assert that both Defendants engaged in bad faith, unfair and deceptive practices, interfered with business relationships, and violated the Fair Debt Collection Practices Act by failing to fulfill their obligations to the Plaintiffs, failing to correct errors in their account, failing to respond to written requests, charging interest off inaccurate principal balances, charging fraudulent fees, and failing to properly oversee and manage the servicing of their loan. (Id. at ¶¶ 53, 56, 59, 62, 86).

         Plaintiffs allege that Defendants instructed Plaintiffs “to default in order to qualify for a loan modification and then failed to mitigate damages and offered an unaffordable loan modification with payments higher than the original payment causing them to charge excessive late fees and penalties, interest on a higher principal amount, inspection fees when services were never rendered, and legal fees and costs.” (Id. at ¶¶ 67, 78, 101).

         STANDARD OF REVIEW

         The Court must dismiss a complaint as a matter of law pursuant to Federal Rule of Civil Procedure 12(b)(6) where it fails “to state a claim upon which relief can be granted.” Rule (8)(a)(2) of the Federal Rules of Civil Procedure requires “a short and plain statement of the claim showing that the pleader is entitled to relief.” When considering a Rule 12(b)(6) motion to dismiss, the Court must presume all allegations of material fact to be true and draw all reasonable inferences in favor of the non-moving party. Pareto v. F.D.I.C., 139 F.3d 696, 699 (9th Cir. 1998). Conclusory allegations of law and unwarranted inferences are insufficient to defeat a motion to dismiss. Id. at 699. The Court need not accept as true allegations that contradict matters properly subject to judicial notice or allegations contradicting the exhibits attached to the complaint. Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001).

         In Bell Atl. Corp. v. Twombly, the United States Supreme Court addressed the pleading standards under the Federal Rules of Civil Procedure in the anti-trust context. 550 U.S. 544 (2007). The Supreme Court stated that Rule 8 of the Federal Rules of Civil Procedure “requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action, ” and that “[f]actual allegations must be enough to raise a right to relief above the speculative level.” Id. at 555.

         Most recently, in Ashcroft v. Iqbal, the Supreme Court clarified that the principles announced in Twombly are applicable in all civil cases. 129 S.Ct. 1937 (2009). The Court stated that “the pleading standard Rule 8 announces does not require ‘detailed factual allegations, ' but it demands more than an unadorned, the-defendant-unlawfully-harmed-me-accusation.” Id. at 1949 (citing Twombly, 550 U.S. at 555). To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face. Id.(quoting Twombly, 550 U.S. at 570). A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Id. (citing Twombly, 550 U.S. at 556). The plausibility standard is not akin to a “probability requirement, ” but it asks for more than a sheer possibility that a defendant has acted unlawfully. Id. (quoting Twombly, 550 U.S. at 556). Where a complaint pleads facts that are “merely consistent with” a defendant's liability, it “stops short of the line between possibility and plausibility of ‘entitlement to relief.'” Id. (quoting Twombly, 550 U.S. at 557).

         The complaint “must contain sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively” and “must plausibly suggest an entitlement to relief, such that it is not unfair to require the opposing party to be subjected to the expense of discovery and continued litigation.” AE ex rel. Hernandez v. Cnty of Tulare, 666 F.3d 631, 637 (9th Cir. 2012) (internal quotations omitted).

         ANALYSIS

         I. DEFENDANTS' REQUEST FOR JUDICIAL NOTICE (ECF No. 8-2)

         The Court may consider exhibits attached to the Complaint and documents whose contents are incorporated by reference in the Complaint without converting a motion to dismiss to a motion for summary judgment. Davis v. HSBC Bank Nevada, N.A., 691 F.3d 1152, 1160 (9th Cir. 2012).

         Here, the Court will consider the Mortgage attached as Ex. 1 to Plaintiffs' Complaint. (ECF No. 1 at pp. 31-46).

         The Court may also consider matters that are the proper subject of judicial notice pursuant to Federal Rule of Evidence 201. Lee v. City of Los Angeles, 250 F.3d 668, 688-89 (9th Cir. 2001); Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007). Federal Rule of Evidence 201 allows a court to take judicial notice of public documents. Barber v. Ohana Military Communities, LLC, 2014 WL 3529766, *4 (D. Haw. July 15, 2014).

         Defendants' Request for Judicial Notice seeks judicial notice of publicly available Court records from the United States Bankruptcy Court of Hawaii in Case Nos. 11-02518 and 12-01401 that involve the Plaintiffs and Defendant Deutsche Bank.

         The Court grants the Defendants' Motion to consider the following documents pertaining to Plaintiff Jerry Agbannaoag:

(1) Chapter 7 Voluntary Petition filed by Plaintiff Jerry Agbannaoag dated September 22, 2011, in the United States Bankruptcy Court of Hawaii, Case No. 11-02518, attached as Ex. A (ECF No. 8-3);
(2) Motion for Relief from Stay filed by Defendant Deutsche Bank National Trust Company dated December 16, 2011, in the United States Bankruptcy Court of Hawaii, Case No. ...

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