United States District Court, D. Hawaii
ORDER GRANTING DEFENDANTS' MOTION FOR JUDGMENT ON
THE PLEADINGS ON COUNT II OF THE COMPLAINT AND GRANTING IN
PART AND DENYING IN PART PLAINTIFF'S MOTION FOR PARTIAL
C. KAY UNITED STATES DISTRICT JUDGE
BACKGROUND ........................................... 4
BACKGROUND .............................................. 7
Judgment on the Pleadings ............................... 9
II. Summary Judgment ......................................
Defendants' Motion for Judgment on the Pleadings as to
Count II of the Complaint .............................. 13
Whether the Claim is Time-Barred Under Haw. Rev. Stat.
Chapter 480 .......................................... 13
Whether the SCRA Provides a Cognizable Basis for
Plaintiff's UDAP Claim ............................... 26
Whether Count II is Insufficiently Pled to the Extent it is
Based on the 2015 Communications or Any Other Conduct
Plaintiff's Motion for Partial Summary Judgment ........
FDCPA Claim .......................................... 36
Whether Plaintiff Establishes that the Loan was a Personal
Debt ................................... 37
Whether Ocwen is a “Debt Collector” .............
Whether Defendants Violated the FDCPA ........... 49
Whether Defendants Violated the FDCPA When they Demanded
Different Amounts Owed on the Same Date
Whether Defendants' Alleged “Gamesmanship” in
the Instant Litigation Violated the FDCPA ....52
Whether Defendants Violated the FDCPA for Sending Plaintiff
Letters After They Knew He was Represented by an Attorney
Whether Defendants Violated the FDCPA by Improperly Charging
Late Fees, Insurance Charges, and Attorney's Fees
Whether Defendants Violated the FDCPA by Reporting False
Credit Information ........... 58
Whether Defendants Violated the FDCPA by Attempting to
Collect on the Alleged Debt, Even Though They Knew it was
Time-Barred .......... 59
Whether the Bona Fide Error Defense Applies ..... 62
Claim ........................................... 63
Negligence and Negligent Misrepresentation Claims....65
reasons set forth below, the Court GRANTS Defendants'
Motion for Judgment on the Pleadings on Count II of the
Complaint. The Court DISMISSES Count II of the Complaint
WITHOUT PREJUDICE. The Court GRANTS IN PART and DENIES IN
PART Plaintiff Heejoon Chung's Motion for Partial Summary
January 18, 2016, Plaintiff Heejoon Chung
(“Plaintiff”) filed a Complaint for Damages and
Injunctive Relief (“Complaint”) against
Defendants U.S. Bank, N.A. Trustee, Under Securitization
Servicing Agreement dated as of December 1, 2005, Structured
Asset Investment Loan Trust Mortgage Pass-Through
Certificates, Series 2005-11 (“U.S. Bank”) and
Ocwen Loan Servicing, LLC (“Ocwen, ” and together
with U.S. Bank, “Defendants”). ECF No. 1.
Plaintiff asserts that Defendants made false and misleading
representations in connection with a non-judicial foreclosure
on real property located at 91-743 Ihipehu Street, Ewa Beach,
Hawaii 96706 (“Property”), and later attempted to
collect a debt from him despite purporting to release him
from such debt upon foreclosure. Id. ¶¶
12, 27, 3063, 67. Plaintiff alleges: (1) violations of the
Fair Debt Collection Practices Act (“FDCPA”), 15
U.S.C. § 1692; (2) unfair or deceptive acts or practices
(“UDAP”) in violation of the Hawaii Revised
Statutes (“Haw. Rev. Stat.”), Chapter 480 and the
Servicemembers Civil Relief Act (“SCRA”); (3)
negligent misrepresentation; and (4) negligence. Id.
Count I of his Complaint, Plaintiff predicates his FDCPA
claim on conduct occurring within the year prior to the
filing of the case. Id. ¶ 50. Plaintiff alleges
violations of 15 U.S.C. §§ 1692c-g. Id.
¶¶ 48-56. In Count II of his Complaint, Plaintiff
alleges UDAP violations under provisions of Haw. Rev. Stat.
Chapter 480 and the SCRA based on events in 2005 and 2010.
Id. ¶¶ 59-60. Plaintiff specifically
predicates his UDAP claim on the following statutes: (1) 50
U.S.C. § 521; (2) Haw. Rev. Stat. § 667-1, et
seq.; (3) Haw. Rev. Stat. § 480D-1, et.
seq.; (4) Haw. Rev. Stat. § 443B-1, et.
seq.; (5) Haw. Rev. Stat. § 480-1, et
seq.; (6) Haw. Rev. Stat. § 480-2; and (7) Haw.
Rev. Stat. § 480-12. Id. ¶¶ 57-61.
Defendants filed an Answer to the Complaint on February 23,
2016 responding to the allegations in the Complaint and
asserting various affirmative defenses. ECF No. 13.
11, 2016, Plaintiff filed a Motion for Judgment on the
Pleadings and Memorandum in Support of Motion “based
upon the failure of Defendants to truthfully respond to the
allegations of the Complaint.” ECF No. 24-1 at 1. The
Court denied Plaintiff's Motion on September 6, 2016. ECF
No. 32. On September 9, 2016, Defendants filed a Motion for
Leave to file a First Amended Answer, Counterclaim, and Third
Party Complaint. ECF No. 33. Plaintiff opposed
Defendants' request. ECF No. 35. Defendants filed a First
Amended Answer, Counterclaim, and Third Party Complaint on
October 5, 2016. ECF No. 37. On November 1, 2016, the
Magistrate Judge entered an order granting in part and
denying in part Defendants' Motion for Leave to File a
First Amended Answer, Counterclaim, and Third Party
Complaint. ECF No. 43.
November 9, 2016, Defendants filed a Motion for Judgment on
the Pleadings on Count II of the Complaint
(“Defendants' Motion”). ECF No. 48. On
February 27, 2017, Plaintiff filed an Opposition to
Defendants' Motion for Judgment on the Pleadings
(“Plaintiff's Opposition”). ECF No. 66. On
March 6, 2017, Defendants filed their Reply to
Plaintiff's Opposition (“Defendants'
Reply”). ECF No. 70.
March 8, 2017, the Court ordered supplemental briefing on
whether 50 U.S.C. § 3936 would apply to the statute of
limitations issue raised in Defendants' Motion. ECF No.
71. On March 14, 2017, both parties filed Memorandum
addressing this issue. ECF Nos. 73, 74.
on November 9, 2016, Plaintiff filed a Motion for Partial
Summary Judgment (“Plaintiff's Motion”) on
all claims, reserving the damages determination (ECF No. 45),
along with a Concise Statement of Facts in support of his
Motion (“Pl.'s CSF in Supp.”). ECF No. 46. On
February 27, 2017, Defendants filed an Opposition to
Plaintiff's Motion for Partial Summary Judgment
(“Defendants' Opposition”) (ECF No. 67),
along with a Separate and Concise Statement of Facts
(“Defs.' CSF in Opp'n”). ECF No. 68. On
March 6, 2017, Plaintiff filed a Reply to Defendants'
Opposition (“Plaintiff's Reply”). ECF No. 69.
Court held a hearing on Defendants' and Plaintiff's
Motions on March 20, 2017 at 11:00 a.m. At the hearing, the
Court asked Defendants to file a full version of the Asset
Purchase Agreement, which was Exhibit 1 of Defendants'
Separate and Concise Counterstatement of Facts. Defendant
thereafter filed the full agreement. ECF No. 76. The Court
then gave Plaintiff an opportunity to respond. ECF No. 77.
Plaintiff filed a Memorandum responding to the full document
on March 24, 2017. ECF No. 78.
October 4, 2005, Plaintiff purchased the Property. Complaint
¶ 12. The purchase was made with funds obtained from BNC
Mortgage, Inc. (“BNC”), which was a loan secured
by a first mortgage on the Property and later transferred to
U.S. Bank on March 10, 2010. Complaint ¶ 13; Pl.'s
CSF in Supp., Exs. B1, B2, D. Plaintiff alleges, upon
information and belief, that there were various
irregularities in the loan process with BNC, including
failure to provide proper disclosures, an improper signing
location, and failure to provide copies of the loan
documents. Complaint ¶¶ 16-19, 22. Several days
after closing, Plaintiff entered into a second mortgage loan
on the Property. Id. ¶ 21.
Servicing (“HomEq”) originally handled the loan
servicing. Pl.'s CSF in Supp., Ex. C. On April 15, 2009,
HomEq sent Plaintiff a letter advising him of his default on
the loan, which Plaintiff did not receive. Complaint ¶
24; Pl.'s CSF in Supp., Chung Decl. ¶ 18.
alleges that the mortgage was non-judicially foreclosed
through a public auction conducted on July 8, 2010. Complaint
¶ 27; Pl.'s CSF in Supp., Ex. E ¶ 5j. A
Mortgagee's Affidavit of Foreclosure Under Power of Sale
(“Affidavit”) was recorded in the Land Court on
August 3, 2010. Complaint ¶ 27; Pl.'s CSF in Supp.,
Ex. E. The Affidavit erroneously stated that Plaintiff was
not on active military duty at the time of foreclosure when,
in fact, a report attached as an exhibit to the affidavit
indicates that he was on active military duty from November
3, 1995 with no end date. Complaint ¶¶ 31-32,
Pl.'s CSF in Supp., Ex. E. Plaintiff was stationed in
South Carolina in 2010 and alleges that he did not receive
notice of the non-judicial foreclosure during that time.
Complaint ¶ 28.
a problem with recording the deed, however, title to the
Property never passed to U.S. Bank but remained in
Plaintiff's name. Pl.'s CSF in Supp., Chung Decl.
¶ 33; Defs.' CSF in Opp'n, Flannigan Decl.
began servicing the loan in 2010. Defs.' CSF in
Opp'n, Ex. 1. In July 2015, Ocwen sent Plaintiff letters
stating that the loan was delinquent as of March 2, 2009 and
that the current amount due on the loan exceeded $216, 000.
Complaint ¶¶ 36-38; Pl.'s CSF in Supp., Exs. G,
H. Shortly thereafter, Plaintiff contacted an attorney and
first learned of the non-judicial foreclosure. Pl.'s CSF
in Supp., Chung Decl. ¶ 23.
was on “Active Duty Status” in the U.S. Army from
November 3, 1995 until November 2015. Complaint ¶¶
3, 11; Plaintiff's Reply, Exhibit A (Plaintff's
Depo.) at 198.
Judgment on the Pleadings
Federal Rule of Civil Procedure 12(c), “[a]fter the
pleadings are closed-but early enough not to delay trial-a
party may move for judgment on the pleadings.” Judgment
on the pleadings is properly granted “when, accepting
all factual allegations in the complaint as true, there is no
issue of material fact in dispute, and the moving party is
entitled to judgment as a matter of law.” Chavez v.
United States, 683 F.3d 1102, 1108 (9th Cir. 2012)
(citation and original alteration omitted).
under Rule 12(c) is substantially identical to analysis under
Rule 12(b)(6) because, under both rules, a court must
determine whether the facts alleged in the complaint, taken
as true, entitle the plaintiff to a legal remedy.
Id. The Court must therefore assess whether the
complaint “contain[s] sufficient factual matter,
accepted as true, to ‘state a claim to relief that is
plausible on its face.'” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 570 (2007)); see
also Harris v. Cty. of Orange, 682 F.3d 1126, 1131 (9th
Cir. 2012) (Iqbal applies to Rule 12(c) motions
because Rule 12(b)(6) and Rule 12(c) motions are functionally
on the pleadings under Rule 12(c) is limited to material
included in the pleadings, unless the Court elects to convert
the motion into one for summary judgment. Yakima Valley
Mem'l Hosp. v. Dep't of Health, 654 F.3d 919,
925 n.6 (9th Cir. 2011). Rule 12(d) gives the Court
“discretion to accept and consider extrinsic materials
offered in connection with these motions, and to convert the
motion to one for summary judgment when a party has notice
that the district court may look beyond the pleadings.”
Hamilton Materials, Inc. v. Dow Chem. Corp., 494
F.3d 1203, 1207 (9th Cir. 2007).
Court must accept as true the facts as pled by the
non-movant, and will construe the pleadings in the light most
favorable to the nonmoving party. U.S. ex rel. Cafasso v.
Gen. Dynamics C4 Sys., Inc., 637 F.3d 1047, 1053 (9th
Cir. 2011); Doyle v. Raley's Inc., 158 F.3d
1012, 1014 (9th Cir. 1998). Additionally, mere conclusory
statements in a complaint or “formulaic recitation[s]
of the elements of a cause of action” are not
sufficient. Twombly, 550 U.S. at 555. Thus, the
Court discounts conclusory statements, which are not entitled
to a presumption of truth, before determining whether a claim
is plausible. Iqbal, 556 U.S. at 678. However,
“dismissal with prejudice and without leave to amend is
not appropriate unless it is clear on de novo review that the
complaint could not be saved by amendment.” Harris
v. Cty. of Orange, 682 F.3d 1126, 1131 (9th Cir. 2012)
judgment is proper where there is no genuine issue of
material fact and the moving party is entitled to judgment as
a matter of law. Fed.R.Civ.P. 56(a). Rule 56(a) mandates
summary judgment “against a party who fails to make a
showing sufficient to establish the existence of an element
essential to the party's case, and on which that party
will bear the burden of proof at trial.” Celotex
Corp. v. Catrett, 477 U.S. 317, 322 (1986); see also
Broussard v. Univ. of Cal. at Berkeley, 192 F.3d 1252,
1258 (9th Cir. 1999).
party seeking summary judgment bears the initial burden of
informing the court of the basis for its motion and of
identifying those portions of the pleadings and discovery
responses that demonstrate the absence of a genuine issue of
material fact.” Soremekun v. Thrifty Payless,
Inc., 509 F.3d 978, 984 (9th Cir. 2007) (citing
Celotex, 477 U.S. at 323); see also Jespersen v.
Harrah's Operating Co., 392 F.3d 1076, 1079 (9th
Cir. 2004). “When the moving party has carried its
burden under Rule 56 [(a)] its opponent must do more than
simply show that there is some metaphysical doubt as to the
material facts [and] come forward with specific facts showing
that there is a genuine issue for trial.”
Matsushita Elec. Indus. Co. v. Zenith Radio, 475
U.S. 574, 586-87 (1986) (citation and internal quotation
marks omitted); see also Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 247-48 (1986) (stating that a party
cannot “rest upon the mere allegations or denials of
his pleading” in opposing summary judgment).
issue is ‘genuine' only if there is a sufficient
evidentiary basis on which a reasonable fact finder could
find for the nonmoving party, and a dispute is
‘material' only if it could affect the outcome of
the suit under the governing law.” In re
Barboza, 545 F.3d 702, 707 (9th Cir. 2008) (citing
Anderson, 477 U.S. at 248). When considering the
evidence on a motion for summary judgment, the court must
draw all reasonable inferences on behalf of the nonmoving
party. Matsushita Elec. Indus. Co., 475 U.S. at 587;
see also Posey v. Lake Pend Oreille Sch. Dist. No.
84, 546 F.3d 1121, 1126 (9th Cir. 2008) (stating that
“the evidence of [the nonmovant] is to be believed, and
all justifiable inferences are to be drawn in his
Defendants' Motion for Judgment on the Pleadings as to
Count II of the Complaint
Whether the Claim is Time-Barred Under Haw. Rev. Stat.
argue that Plaintiff's claims under Haw. Rev. Stat.
§ 480-based on the origination of his loan in October
2005 and representations made about Plaintiff's military
status during the non-judicial foreclosure conducted in
August 2010-are time barred. Under Haw. Rev. Stat. §
480-24, “Any action to enforce a cause of action
arising under [Chapter 480] shall be time barred unless
commenced within four years after the cause of action accrues
. . . a cause of action for a continuing violation is deemed
to accrue at any time during the period of the
argue that the occurrence rule, which states that a cause of
action accrues upon the occurrence of the alleged violation,
applies. On the other hand, Plaintiff argues that the
discovery rule, which states that a cause of action accrues
when the plaintiff discovers the harm, applies. The Court
holds that a UDAP cause of action accrues, pursuant to Haw.
Rev. Stat. § 480-24, four years from the date of the
occurrence of the violation, as opposed to
Plaintiff's discovery of the violation. See McDevitt
v. Guenther, 522 F.Supp.2d 1272, 1289 (D. Haw. 2007)
(Kay, J.) (“The Court holds that the applicable rule
governing the statute of limitations for claims arising under
Haw. Rev. Stat. § 480-2 is the occurrence rule.”);
see also In re Sumbillo, No. AP 1490052, 2015 WL
5162466, at *2 (D. Haw. Sept. 1, 2015) (noting that
“[j]udges in this District Court for the past
thirty-five years [have applied the occurrence rule] in
determining when a cause of action accrues under Chapter
480”); Lowther v. U.S. Bank N.A., 971
F.Supp.2d 989, 1003 (D. Haw. 2013) (applying the occurrence
rule); Rundgren v. Bank of N.Y. Mellon, No. CIV
10-00252 JMS/LEK, 2010 WL 4066878, at *6 (D. Haw. Oct. 14,
Court is not persuaded by Plaintiff's argument that the
discovery rule is now the standard in Hawaii. Plaintiff
argues that two cases invoking the discovery rule apply here:
Schmidt v. HSC, Inc., 131 Haw. 497, 503, 319 P.3d
416, 422 (2014) and Leibert v. Fin. Factors, Ltd.,
71 Haw. 285, 286, 788 P.2d 833, 835 (1990). However, neither
case considered a UDAP claim under Chapter 480;
Schmidt involved a Hawaii law related to fraudulent
transfer, and Leibert involved a Hawaii law related
to fraudulent concealment. In addition, Plaintiff's
argument-that a case cited by Defendants, Reyes v. HSBC
Bank USA, Nat. Ass'n, 135 Haw. 407, 353 P.3d 410
(Haw. Ct. App. 2015), is unpersuasive because it does not
discuss the holding in Schmidt-is of no consequence
because Schmidt does not apply here.
also relies on February 5, 2016 and July 11, 2016 orders and
a hearing transcript in Kane v. Deutsche Bank Nat. Trust
Co., Adv. No. 15-90045 (Bankr. D. Haw. 2016). The
Kane court held that the statute of limitations does
not bar a claim under Haw. Rev. Stat. § 480-12, a
provision which voids a contract that violates Chapter 480,
because it is a defense and to bar such claims would result
in a void contract becoming “un-void” due to the
mere lapse of time. However, the Kane court did not
rely on any authority for this assertion and also stated that
it was merely predicting how the Hawaii state courts would
hold. In addition, contrary authority exists. See
Rundgren v. Bank of N.Y. Mellon, Civ. No. 10-00252
JMS/LEK, 2010 WL 4066878, at *6 (D. Haw. Oct. 14, 2010)
(“[Section] 480-24's four-year statute of
limitations, which extends to any action to enforce a cause
of action arising under this chapter, also applies to §
480-12.” (internal quotation marks and original
alteration omitted)). The Court, therefore, declines to follow
Kane and holds that the occurrence rule applies.
the occurrence rule applies, the Court must determine when
the violation occurred. A violation does not occur until all
the elements of a claim have occurred, including injury and
damages. In re Sumbillo, Civ. No. 15-00125 JMS-BMK,
2015 WL 5162466, at *3 (D. Haw. Sept. 1, 2015). Without
citing any authority, Plaintiff argues that injury and damage
did not occur until after Plaintiff received the demand
letters from Ocwen in 2015 and incurred damages in
determining his rights. This, however, would be the date
Plaintiff discovered the injury and not the date when the
injury and damages occurred.
Court finds that any injury and damages in this case would
have occurred on the only two dates pled in Plaintiff's
complaint related to the UDAP claim-the date of the loan
transactions on October 4, 2005 and the Affidavit, which was
filed on August 3, 2010. See id. at *3
(“[C]ontrary to Deutsche Bank's argument that the
injury and damages both occurred when the notice was
published-the Sumbillos could not have been injured or
damaged at least until the date of the auction on August 26,
2010.”); Uyeshiro v. Irongate Azrep BW LLC,
Civ. No. 13-00043 ACK-BMK, 2014 WL 414219, at *15 (D. Haw.
Feb. 3, 2014) (Kay, J.) (stating that the conduct at issue
occurred when the sales contract was executed); Ramos v.
Chase Home Fin., 810 F.Supp.2d 1125, 1128, 1139 (D. Haw.
2011) (holding that the claim accrued on the date the loan
transaction was consummated). Because Plaintiff did not file
his complaint until January 19, 2016, approximately 10 years
and 3 months after the October 2005 loan transaction and five
years and six months after the July 2010 foreclosure, the
claim is time-barred unless there is a basis for tolling the
statute of limitations.
argues that the limitations period should be tolled because
Defendants failed to serve Plaintiff with notice of
foreclosure, and Plaintiff did not learn of the foreclosure
of his home and the Affidavit stating that he was not in the
military until 2015. Plaintiff further alleges that when
Defendants sent a letter to Plaintiff demanding payment in
2015, they continued to conceal their foreclose proceedings.
Plaintiff cites to Rundgren v. Bank of N.Y. Mellon,777 F.Supp.2d 1224 (D. Haw. 2011) to support his claim. In
Rundgren, the Court held that equitable tolling may
be appropriate in a Haw. Rev. Stat. § 480 claim where
there has been fraudulent concealment. See id. at
1231 (construing “HRS Ch. 480 in accordance with
federal cases interpreting similar ...