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Chadwick v. SBMC Mortgage

United States District Court, D. Hawaii

August 9, 2017

BRUCE KENT CHADWICK, Plaintiff,
v.
SBMC MORTGAGE, et al., Defendants.

          ORDER GRANTING DEFENDANT'S MOTION TO DISMISS, ECF NO. 12

          J. Michael Seabright, Chief United States District Judge.

         I. INTRODUCTION

         Plaintiff Bruce Kent Chadwick (“Plaintiff”) filed his First Amended Complaint (“FAC”), ECF No. 8, against Defendant SBMC Mortgage[1] (“SBMC”), alleging assorted violations of the Truth in Lending Act (“TILA”), 15 U.S.C. § 1601 et seq., at least in part concerning a prior judicial foreclosure on property located at 151 Mele Komo Place, Lahaina, HI 96761 (the “Subject Property”). FAC at 1, 5-10;[2] Ex. A at 2, ECF No. 8-1.

         Defendant moves to dismiss the FAC, arguing that Plaintiff's present claims are barred by res judicata because of prior final state court proceedings.[3]For the following reasons, the court GRANTS Defendant's Motion to Dismiss (“Defendant's Motion”), ECF No. 12.

         II. BACKGROUND

         A. Factual Background

         On August 1, 2006, Plaintiff borrowed $1, 600, 000 from SBMC and executed a note to that effect. Ex. B to FAC at 2-3, ECF No. 8-2. Plaintiff executed a mortgage (the “Subject Mortgage”) on the Subject Property as security for the loan to Mortgage Electronic Registration Systems, Inc. (“MERS”) as nominee for SBMC and SBMC's assigns. Id. On August 8, 2008, MERS assigned the Subject Mortgage to E*Trade Bank. Ex. A to FAC at 9, ECF No. 8-1. Plaintiff then allegedly mailed a notice of rescission to E*Trade Bank on June 10, 2009. FAC at 5; Ex. A to FAC at 2-7, ECF No. 8-1.

         On October 9, 2009, E*Trade Bank commenced judicial foreclosure proceedings in the Circuit Court of the Second Circuit, State of Hawaii, Civil No. 09-1-0781(2) (the “State Foreclosure Action”). See Hawai'i State Judiciary's Public Access to Court Information, Case ID 2CC091000781, http://hoohiki.courts.hawaii.gov/#/case?caseId=2CC091000781 (last viewed Aug. 7, 2017); see also Ex. C to Def.'s Mot., ECF No. 12-6.[4] On January 19, 2011, the state court issued its “Findings of Fact, Conclusions of Law and Order Granting [E*Trade Bank]'s Motion for Summary Judgment and Decree of Foreclosure Against [Plaintiff] on Complaint Filed October 9, 2009” (the “State Summary Judgment Order”). Ex. C to Def.'s Mot., ECF No. 12-6. In the State Summary Judgment Order, the state court found that the Subject Mortgage was valid and that Plaintiffs had failed to make the agreed-upon payments. Id. at 3, 5. The state court further found that E*Trade Bank is entitled “to have its Mortgage foreclosed” and “to judgment in its favor as a matter of law on its complaint.” Id. at 5, 6.

         On January 19, 2011, pursuant to Hawaii Rule of Civil Procedure (“HRCP”) 54(b), the state court entered its “Judgment on Findings of Fact, Conclusions of Law and Order Granting [E*Trade Bank]'s Motion for Summary Judgment and Decree of Foreclosure Against [Plaintiff] on Complaint Filed October 9, 2009” (“State Court Judgment 1”). Ex. D to Def.'s Mot., ECF No. 12-7. And on March 6, 2012, the Hawaii Intermediate Court of Appeals (“ICA”) affirmed State Court Judgment 1. Ex. E to Def.'s Mot., ECF No. 12-8.

         On April 25, 2012, the state court entered its “Order Approving Report of Commissioner, Confirming Commissioner's Sale of Property at Public Auction, Direction Distribution of Proceeds and for a Writ of Ejectment, ” and entered judgment on that order (“State Court Judgment 2”). Ex. F to Def.'s Mot., ECF No. 12-9; Ex. G to Def.'s Mot., ECF No. 12-10. The ICA affirmed State Court Judgment 2 on March 24, 2014. Ex. H to Def.'s Mot., ECF No. 12-11.

         B. Procedural Background

         Plaintiff filed his original Complaint in this court on April 18, 2017. ECF No. 1. On April 26, 2017, Plaintiff filed his FAC. ECF No. 8. The FAC asserts four causes of action, all arising under TILA. FAC at 5-10.

         SBMC filed this Motion on May 22, 2017. ECF No. 12. On July 17, 2017, Plaintiff filed his Opposition, and on July 24, 2017, SBMC filed its Reply. Pl.'s Opp'n, ECF No. 16; Def.'s Reply, ECF No. 17. The court decides the Motion without a hearing, pursuant to Local Rule 7.2(d).

         III. STANDARD OF REVIEW

         Federal Rule of Civil Procedure 12(b)(6) permits a motion to dismiss for “failure to state a claim upon which relief can be granted[.]” A Rule 12(b)(6) dismissal is proper when there is either a “‘lack of a cognizable legal theory or the absence of sufficient facts alleged.'” UMG Recordings, Inc. v. Shelter Capital Partners, LLC, 718 F.3d 1006, 1014 (9th Cir. 2013) (quoting Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990)).

         Although a plaintiff need not identify the legal theories that are the basis of a pleading, see Johnson v. City of Shelby, Mississippi, 135 S.Ct. 346, 346 (2014) (per curiam), a plaintiff must nonetheless allege “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 Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). This tenet -- that the court must accept as true all of the allegations contained in the complaint -- “is inapplicable to legal conclusions.” Id. Accordingly, “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. (citing Twombly, 550 U.S. at 555); see also Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011) (“[A]llegations in a ...


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