United States District Court, D. Hawaii
ORDER: (1) DISMISSING FIRST AMENDED COMPLAINT WITHOUT
LEAVE TO AMEND; AND (2) REVOKING PLAINTIFF'S IFP
Michael Seabright, Chief United States
April 18, 2017, pro se Plaintiff Lizabeth-Emi Bendeck
(“Plaintiff”) filed a document titled “Bill
in Equity to Declare an Absolute Deed to be a Mortgage;
Exoneration of Surety; To Construct a Trust upon the
Grantee/Trustee; and Notice of Merger in the Equity
Jurisdiction, ” which the court construed as a
Complaint. ECF No. 1. On May 4, 2017, the court
dismissed the Complaint, with leave to amend, for lack of
subject matter jurisdiction and failure to state a plausible
claim for relief (“May 4 Order”). ECF No. 6;
Bendeck v. Workman, 2017 WL 1758079, at *4-5 (D.
Haw. May 4, 2017).
30, 2017, Plaintiff filed an “Amended Bill in Equity,
” which the court construes as a First Amended
Complaint (“FAC”), against Defendants U.S. Bank
National Association (“US Bank”) and JPMorgan
Chase Bank N.A. (“Chase Bank”) (collectively,
“Defendants”) asserting claims for breach of
contract, breach of trust, and conversion based on
allegations of mortgage and securities fraud in connection
with Plaintiff's residential mortgage loan. ECF No. 7.
Plaintiff seeks reimbursement of all loan payments,
declaratory and injunctive relief, and an award of fees and
reasons set forth below, the court finds that the FAC fails
to state a plausible claim for relief. Further, the court
finds that the theories upon which Plaintiff's claims and
allegations are based are frivolous, and therefore amendment
would be futile. Accordingly, the FAC is DISMISSED without
leave to amend. The court further finds that any appeal of
this Order would not be taken in good faith and therefore,
Plaintiff's IFP status is REVOKED.
January 12, 2006, Plaintiff executed a promissory note
(“Note”) for a $302, 000 residential mortgage
loan (“Mortgage”) from Home 123 Corporation
(“Home 123”), secured by real property located at
43 Pakalana Street, Hilo, Hawaii (the “subject
property”). FAC ¶¶ 19, 29, 30, 32; Pl.'s
Exs. 1, 2. The Mortgage, recorded at the State of Hawaii
Bureau of Conveyances on January 19, 2006, identifies
“LIZABETH E. BENDECK” as the Borrower and Home
123 as the Lender. Pl.'s Ex. 1 at 1, 2. In addition to
signing the Mortgage, Plaintiff also “granted [Home
123] a deed of trust on the [subject property].” FAC
¶ 20. The FAC alleges that the Note was sold to
“[US Bank], as Trustee for Residential Asset Mortgage
Products, Inc., Mortgage Asset Backed Pass-Through
Certificates, Series 2006-NC3, ” and that Chase Bank is
the current loan servicer. FAC ¶¶ 13, 15; Allonges,
Pl.'s Exs. 3, 4.
believing that she had received a loan, Plaintiff allegedly
made “numerous monthly payments” to Home 123 and
Chase Bank. Id. ¶¶ 20, 22, 23, 30-31, 37.
Sometime thereafter, Plaintiff was “informed of
mortgage fraud, ” and now alleges that Home 123 did not
actually loan her “the sum of $302, 000.00.”
Id. ¶ 33. To establish this belief, the FAC
first alleges that Plaintiff is neither the
“Borrower” nor “LIZABETH E. BENDECK,
” and thus she is not the person who allegedly obtained
a loan from Home 123. Id. ¶¶ 45, 52(c).
Second, the FAC alleges that that “at no time did
[Plaintiff] personally receive a check or deposit into [her]
checking account in the amount of $302, 000.00 from Home
123.” Id. ¶ 52(f).
the FAC alleges in conclusory fashion that pursuant to
federal banking law and accounting principles: (a) the
“Note has cash value, ” id. ¶ 64;
(b) Home 123 was required to deposit and record the Note in
its books as a bank asset in the amount of $302, 000,
id. ¶¶ 54-59; and (c) once recorded, Home
123 became the borrower and owed Plaintiff, the lender,
payment of $302, 000, id. ¶¶ 54, 57, 60.
Thus, the FAC alleges that “payment from a bank in
exchange for a Promissory Note . . . is not a loan, but
merely an asset swap.” Id. ¶ 64.
the FAC alleges that Home 123 was “not out any money on
[the alleged asset swap] because it had no money in the deal
in the first place.” Id. ¶ 84. Home 123
allegedly “took [Plaintiff's] Asset/[Note],
converted it to [its] own use as a securities contract,
” made “huge profits, ” and returned the
amount of the Note to Plaintiff “as a
‘loan.'” Id. ¶¶ 71-73. The
loan from Home 123 was allegedly Plaintiff's “own
funds being returned to her.” Id. ¶ 80.
on the foregoing, the FAC alleges that the Note satisfied
Plaintiff's loan payment obligations at the time of
closing. Id. ¶ 148. Because the loan was
“paid at closing, ” there was no need for a
Mortgage, which was allegedly “obtained by
fraud.” Id. ¶ 149. And by fraudulently
“converting the [Note] into a securities contract and
profiting thereby, ” Defendants committed
“conversion of property . . . and a breach of
trust.” Id. ¶ 153. Additionally, the FAC
alleges that the securitization of the Note, by which the
Note and Mortgage were separated, rendered the Mortgage
invalid and unenforceable. Id. 90-96.
point, U.S. Bank initiated foreclosure proceedings, claiming
that Plaintiff defaulted on the loan. Id.
¶¶ 26, 38. But the FAC alleges that Defendants have
“no standing or lawful authority to foreclose”
because they did not “invest a dime to obtain”
the subject property. Id. ¶¶ 86-88. This
is because not only was the loan allegedly satisfied at
closing, but that pursuant to federal banking law, Defendants
were allegedly reimbursed from insurance for the face value
of the Note 91 days after default. Id. ¶¶
seeks: (1) an order declaring that she holds equitable and
legal title to the subject property; (2) injunctive relief
preventing Defendants from foreclosing the subject property,
and directing Defendants to reimburse Plaintiff for all
payments she made on the loan and all profits obtained from
Defendants' use of the Note; and (3) an award of court
fees and costs. Id. ¶¶ 167, 198.
asserts that this court has diversity jurisdiction over this
action, contending that Plaintiff is “a Private
American National born on Birth State, whose home is on
private common law venue within a non-military occupied
private estate on Hawaii county, on Hawaii state,
” id. ¶ 2, Defendant Chase
Bank “is located in Delaware . . . and is a citizen of
. . . Delaware, ” id. ¶ 3, and Defendant
U.S. Bank “is located [in] . . . Minneapolis, MN . . .
and is a citizen of . . . Minnesota, ” id.
¶ 5. The FAC further alleges that “the amount in
controversy is over $75, 000.” Id. ¶ 7.
FAC's attempt to assert diversity jurisdiction by
alleging that U.S. Bank is located in Delaware, FAC ¶ 3,
and Chase Bank is located in Minnesota, id. ¶
5, is insufficient. “[A] national bank . . . is a
citizen of the State in which its main office, as set forth
in its articles of incorporation, is located.”
Washovia Bank v. Schmidt, 546 U.S. 303, 306-07
(2006); see Rouse v. Wachovia Mortg., FSB, 747 F.3d
707, 709 (9th Cir. 2014) ...