United States District Court, D. Hawaii
RICHARD A. MATTHEWS, DONILEE J. MATTHEWS, JENNETTE E. MATTHEWS aka JENNETTE E. ALEXANDER, Plaintiff,
THE BANK OF NEW YORK MELLON FKA THE BANK OF NEW YORK AS TRUSTEE FOR THE CERTIFICATEHOLDERS OF THE CWALT, INC., ALTERNATIVE LOAN TRUST 2007-OA7, MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2007-OA7, Defendants.
ORDER GRANTING DEFENDANT'S MOTION TO DISMISS
FIRST AMENDED COMPLAINT [DKT. 26]
E. KOBAYASHI, UNITED STATES DISTRICT JUDGE
January 31, 2017, Defendant the Bank of New York Mellon,
formerly known as the Bank of New York as Trustee for the
Certificateholders of the CWALT, Inc., Alternative Loan Trust
2007-OA7, Mortgage Pass-through Certificates, Series 2007-OA7
(“Defendant” and “Defendant Trust”),
filed a Motion to Dismiss First Amended Complaint [Dkt. 26]
(“Motion”). [Dkt. no. 34.] Pro se Plaintiffs
Richard A. Matthews (“R. Matthews”), Donilee J.
Matthews (“D. Matthews”), and Jennette E.
Matthews (“J. Matthews, ” all collectively
“Plaintiffs”), filed a memorandum in opposition
on February 21, 2017, and Defendant filed its reply on March
24, 2017. [Dkt. nos. 37, 40.] The Court finds this
matter suitable for disposition without a hearing pursuant to
Rule LR7.2(d) of the Local Rules of Practice of the United
States District Court for the District of Hawai`i
(“Local Rules”), and the Motion is granted for
the reasons set forth below.
background of this matter is well known to the parties, and
the Court will only discuss the background relevant to the
Motion. On October 27, 2016, the Court filed its order,
inter alia, granting Defendant's motion to
dismiss (“10/27/16 Order”). [Dkt. no. 24.] The
10/27/16 Order dismissed all of the claims in the Complaint
for Damages and Declaratory Relief (“Complaint”),
[Notice of Removal, filed 6/3/16 (dkt. no. 1), Exh. A
(Complaint), ] but allowed Plaintiffs to file an amended
complaint on all but one claim. [10/27/16 Order at 18-19.] On
December 27, 2016, Plaintiffs filed their First Amended
Complaint for Damages and Declaratory Relief (“Amended
Complaint”). [Dkt. no. 26.] The Amended Complaint
brings claims against Defendant for: breach of contract
(“Count I”); [Amended Complaint at pg. 5,
¶¶ 1-50;] slander of title (“Count
II”); [id. at ¶¶ 51-66;] violation
of Haw. Rev. Stat. chapter 480 (“Count III”);
[id. at ¶¶ 67-72;] slander of credit
(“Count IV”); [id. at ¶¶
73-81;] intentional infliction of emotional distress
(“IIED” and “Count V”); [id.
at ¶¶ 82-85;] fraud (“Count VI”);
[id. at ¶¶ 86-124;] misrepresentation
(“Count VII”); [id. at ¶¶
125-30;] civil conspiracy (“Count VIII”);
[id. at ¶¶ 131-35;] and quiet title
(“Count IX”) [id. at ¶¶
136-55]. The Motion seeks dismissal of all nine claims with
prejudice. [Mem. in Supp. of Motion at 2.]
are proceeding pro se, and the Court must liberally construe
their pleadings. See, e.g., Eldridge v.
Block, 832 F.2d 1132, 1137 (9th Cir. 1987) (“The
Supreme Court has instructed the federal courts to liberally
construe the inartful pleading of pro se litigants.”
(citation and internal quotation marks omitted)). Plaintiffs
bring claims related to a piece of property in Lahaina, Maui
(“the Property”). [Amended Complaint at ¶
1.] The 10/27/16 Order explained:
Plaintiffs assert that, when they purchased the Property,
[Axiom Mortgage Bankers Corp. (“Axiom”)] acted as
a mortgage broker but was not licensed to do so, and
therefore “Defendant and its purported predecessor in
interest are basing the mortgage on an illegal and
unenforceable contract.” [Complaint at ¶¶ 13,
15-16.] Further, Plaintiffs argue that, pursuant to
Beneficial Hawaii Inc. v. Kida, “‘loans
made by an unlicensed lender are completely unenforceable in
judicial foreclosure actions in Hawaii.'” [Mem. in
Opp. to Motion to Dismiss at 9 (quoting Kida, 96
Hawai`i 289, 30 P.3d 895 (2001)).]
First, Plaintiffs do not provide a pincite for the quotation
they use to support their argument regarding the Mortgage,
and, after a thorough review of the Hawai`i Supreme
Court's decision, the Court must conclude that this
quotation does not come from Kida. . . .
Plaintiffs correctly point out that, in Kida, the
Hawai`i Supreme Court held that the note and mortgage were
void and unenforceable. See Kida, 96 Hawai`i at 312,
30 P.3d at 918. However, Kida is easily
distinguishable from this case. In Bank of America, N.A.
v. Hill, the Hawai`i Intermediate Court of Appeals
In Kida, although a group known as The Mortgage
Warehouse was designated on the loan documents as the
“lender” while another entity was the
“broker”, The Mortgage Warehouse actually acted
as the broker since it did not have any of its own funds to
lend, but arranged funding from another entity and was
compensated for its services in an arrangement known as
“table funding”. [Kida, 96 Hawai`i] at
306, 30 P.3d at 912. Unlike in Kida, in the present
case, there is no evidence that MortgageIt was acting as a
. . . . Even accepting that MortgageIt was not licensed as a
broker, and assuming that it made the subject mortgage loan
“for compensation or gain”, we do not agree that
it qualified as a broker under [Haw. Rev. Stat.] §
454-1. The statute also defines a mortgage broker as one who
makes a loan on behalf of the borrower. Kida held
that “we construe the phrase ‘on behalf of the
borrower, ' as set forth in [Haw. Rev. Stat.] §
454-1, as amended, to mean ‘in the interest of a
borrower' or ‘for the benefit of a
borrower.'” Id. at 309, 30 P.3d at 915.
However, a lender does not automatically act on behalf of a
borrower when it lends money to the borrower. McCarty v.
GCP Mgmt., LLC, Civil No. 10-00133 JMS/KSC, 2010 WL
4812763 at *4 (D. Haw. Nov. 17, 2010).
“Rather, it is well established that a lender acts on
its own behalf in an arms-length loan transaction (even if a
borrower might in some sense ‘benefit' from the
loan transaction).” Id. Here, the only
evidence is that MortgageIt acted as the lender; nothing
indicates that it attempted to find financing for Hill from
any other lender besides itself. Absent evidence that
MortgageIt acted as Hill's mortgage broker, the note and
mortgage are not void. See Wilson v. Noel, No.
CAAP-12-0000098, 2015 WL 2226273 at *2 (Haw. App. May 12,
2015) (“Because Wind River Brokers did not broker
Noel's mortgage loan transaction, their unlicensed status
does not affect the validity of Noel's note and
mortgage.”); Fed Home Loan Mort[g]. Corp v.
Padron, No. CAAP-13-0001153, 2015 WL 405637 at *2 (Haw.
App. Jan. 29, 2015) (rejecting the argument that a note and
mortgage were void where, although the lender,
SecurityNational, was not a licensed mortgage broker,
“SecurityNational was acting on its behalf as a lender,
not on behalf of Padron as a broker.”).
No. CAAP-13-0000035, 2015 WL 6739087, at *8-9 (Ct. App. Oct.
30, 2015) (emphasis in original) (footnote omitted). Here,
the Mortgage lists the “Borrower” as the Trust
and J. Matthews and the “Lender” as
Axiom. Plaintiffs argue that Axiom worked for the
interest or for the benefit of the borrower Plaintiff.
However, “nothing indicates that it attempted to find