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Matthews v. The Bank of New York Mellon

United States District Court, D. Hawaii

June 30, 2017

RICHARD A. MATTHEWS, DONILEE J. MATTHEWS, JENNETTE E. MATTHEWS aka JENNETTE E. ALEXANDER, Plaintiff,
v.
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]

          LESLIE E. KOBAYASHI, UNITED STATES DISTRICT JUDGE

         On 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.[1] [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

         The 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.]

         DISCUSSION

         Plaintiffs 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 explained:
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 broker.
. . . . 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.[2] Plaintiffs argue that Axiom worked for the interest or for the benefit of the borrower Plaintiff. However, ‚Äúnothing indicates that it attempted to find ...

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