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Burke v. Countrywide Mortgage Ventures, LLC

United States District Court, D. Hawaii

December 19, 2017





         Plaintiffs Thomas Michael Burke and Elizabeth Braxton Burke, proceeding pro se, bring numerous claims against various lenders, loan servicers, and the foreclosing mortgagee under the Truth in Lending Act, 15 U.S.C. § 1601 et seq. (“TILA”), the Real Estate Settlement Procedures Act, 12 U.S.C. § 2601 et seq. (“RESPA”), and 12 C.F.R. Part 226 (“Regulation Z”). The Court previously dismissed the Burkes' Verified Complaint on August 7, 2017, with detailed instructions on the filing of an amended complaint. See Dkt. No. 17 (8/7/17 Order). Defendants Countrywide Mortgage Ventures, LLC dba Western Paradise Financial (“Countrywide”) and Bank of America, N.A. (“BANA”) each filed Motions to Dismiss the Burkes' First Amended Verified Complaint, in light of their failure to comply with the Court's August 7, 2017 Order.[1] Because Plaintiffs' causes of action are time-barred and otherwise fail to state claims for relief, the Court GRANTS Defendants' Motions. Moreover, because further amendment of the Burkes' claims would be futile, dismissal is with prejudice.


         I. Pending Foreclosure Action

         The Burkes' federal claims against Countrywide relate to a Mortgage on their real property, located at 2073 Kahaapo Loop, Kihei, Hawaii 96753 (“Property”), at issue in a pending state foreclosure proceeding filed on October 20, 2014 in the Circuit Court of the Second Circuit, State of Hawaii. See 8/7/17 Order (citing Def.'s Ex. 2 (Certified Copy of Foreclosure Compl.)); Dkt. No 10-2.[2] In Christiana Trust, a Division of Wilmington Savings Fund Society, FSB, not in Its Individual Capacity but as Trustee of ARLP Trust 3 v. T. Michael Burke, et al., Civil No. 14-1-0603(1) (“state foreclosure action”), the foreclosing mortgagee seeks to enforce its interest in the $800, 000 Mortgage on the Property, and Promissory Note secured by the Mortgage, both executed on December 11, 2007. See Verified Complaint, Ex. B (12/11/07 Mortgage), Dkt. No 1-2; Ex. C (12/11/07 Note), Dkt. No. 1-3.

         The foreclosing mortgagee, Christiana Trust, asserts that it is the holder of the Note and assignee of the Mortgage by way of assignments from Countrywide to BANA on February 10, 2012, and then from BANA to Christiana Trust on February 7, 2014. See 8/7/17 Order (citing Foreclosure Compl. ¶¶ 6-9). Christiana Trust alleges that the Burkes received a notice of default and intent to accelerate and foreclose the Mortgage in 2012, but despite the notice, the Burkes neglected to cure the default. See 8/7/17 Order (citing Foreclosure Compl. ¶¶ 11). The Burkes challenge Christiana Trust's standing to foreclose on the Property, based in part on their Notice of Rescission/Right to Cancel, recorded at the State of Hawaii Bureau of Conveyances on March 18, 2016. Verified Complaint, Ex. A (Notice of Rescission), Dkt. No. 1-1.

         II. Plaintiffs' Federal Court Action

         On May 17, 2017, the Burkes initiated this federal civil action solely against Countrywide and any “Un-Noticed New Creditor” defendants purporting to be “successors and/or assigns.” Their original Verified Complaint alleged four causes of action, each directed at rescinding, voiding, or canceling their loan on the Property: (1) failure to comply with the requirements of 15 U.S.C. § 1635(b) by returning Plaintiffs' original Note (Count I); (2) violation of 15 U.S.C. § 1641(g) that seeks to remove any cloud on the Property's title (Count II); (3) request to void or cancel the mortgage under 15 U.S.C. § 1635(b) (Count III); and (4) an action to quiet title pursuant to 15 U.S.C. §§ 1635(b) and 1641(g) (Count IV). Among other relief, the Verified Complaint asked that the Court “set[] aside any and every Mortgage or . . . instrument that is or may be purported to ‘secure' the said cancelled transaction, ” and that any “Un-Noticed, ” “New Creditor” be enjoined from taking any action “based upon any security interest that Defendant failed to ‘take any action necessary or appropriate to reflect the termination of . . .', as mandated by law in [Section] 1635(b).” Verified Complaint at 11. On August 7, 2017, this Court dismissed the original Verified Complaint and granted Plaintiffs limited leave to amend in order to allege fraud-based claims and to cure the deficiencies noted in the order. See Dkt. No. 17 at 23-25 (8/7/17 Order). The Burke's various TILA claims, however, were dismissed with prejudice as time-barred. Id. at 13-20.

         On September 11, 2017, the Burkes filed their First Amended Verified Complaint (“FAC”), naming BANA, MERS, and the Fay Defendants in addition to Countrywide, and re-alleging numerous TILA claims that were previously dismissed as time-barred amid the twenty-four causes of action asserted. FAC, Dkt. No. 18. The FAC declares: “This is an action for retirement and return of an illegal Note to certain real estate. This purported Note and the actions taken by Defendants collectively contain unfair trade practices and predatory lending practices[.]” FAC ¶ 4. The Burkes allege that when the Mortgage and Note were executed on or about December 11, 2007, Countrywide did not make required disclosures, “which now affects all Defendants.” FAC ¶¶ 5-13. They also maintain that they never received a Notice of Default and Right to Cure or any notice or acceleration. FAC ¶¶ 15-18. The FAC seeks rescission of the Mortgage and Note in order “to clear title to [the] property, ” FAC ¶ 154; damages for federal statutory violations in the amount of $90, 000 and for unfair and deceptive acts and practices (“UDAP”) in the amount of $180, 000, FAC ¶¶ 155-57; and $1, 000, 000 for violation of Defendants' fiduciary duty. FAC ¶ 160.

         Countrywide and BANA move for dismissal of the FAC because the TILA-based claims are time-barred and it otherwise fails to state a claim for relief. MERS and the Fay Defendants join in Countrywide and BANA's Motions. Plaintiffs did not file any opposition to the Motions.


         I. Motion To Dismiss Under Rule 12(b)(6)

         Federal Rule of Civil Procedure 12(b)(6) authorizes the Court to dismiss a complaint that fails “to state a claim upon which relief can be granted.” Rule 12(b)(6) is read in conjunction with Rule 8(a), which requires “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). The Court may dismiss a complaint either because it lacks a cognizable legal theory or because it lacks sufficient factual allegations to support a cognizable legal theory. Balistreri v. Pacifica Police Dep't., 901 F.2d 696, 699 (9th Cir. 1988). Pursuant to Ashcroft v. Iqbal, “[t]o survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” 555 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 554, 570 (2007)). “[T]he tenet that a court must accept as true all of the allegations contained in a 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). Rather, “[a] claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556). Factual allegations that only permit the court to infer “the mere possibility of misconduct” do not constitute a short and plain statement of the claim showing that the pleader is entitled to relief as required by Rule 8(a)(2). Id. at 679.

         “A statute-of-limitations defense, if ‘apparent from the face of the complaint, ' may properly be raised in a motion to dismiss.” Seven Arts Filmed Entm't Ltd. v. Content Media Corp., 733 F.3d 1251, 1254 (9th Cir. 2013) (quoting Conerly v. Westinghouse Elec. Corp., 623 F.2d 117, 119 (9th Cir. 1980)); see also Rivera v. Peri & Sons Farms, Inc., 735 F.3d 892, 902 (9th Cir. 2013) (“When an affirmative defense is obvious on the face of a complaint, . . . a defendant can raise that defense in a motion to dismiss.”) (citing Cedars-Sinai Med. Ctr. v. Shalala, 177 F.3d 1126, 1128-29 (9th Cir. 1999)). That said, “a complaint cannot be dismissed unless it appears beyond doubt that the plaintiff can prove no set of facts that would establish the timeliness of the claim.” Supermail Cargo, Inc. v. United States, 68 F.3d 1204, 1206-07 (9th Cir. 1995) (citation and quotation marks omitted). In making such a determination, the Court is not “required to accept as true allegations that contradict . . . matters properly subject to judicial notice[.]” Seven Arts, 733 F.3d at 1254 (internal quotation marks omitted). In this case, the statute of limitations issues are apparent on the face of the FAC.

         II. Plaintiffs' Pro Se Status

         Because Plaintiffs are proceeding pro se, the Court liberally construes their filings. See Erickson v. Pardus, 551 U.S. 89, 94 (2007); 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.”) (citing Boag v. MacDougall, 454 U.S. 364, 365 (1982) (per curiam)). The Court recognizes that “[u]nless it is absolutely clear that no amendment can cure the defect . . . a pro se litigant is entitled to notice of the complaint's deficiencies and an opportunity to amend prior to dismissal of the action.” Lucas v. Dep't of Corr., 66 F.3d 245, 248 (9th Cir. 1995); see also Crowley v. Bannister, 734 F.3d 967, 977-78 (9th Cir. 2013).

         A court may, however, deny leave to amend where further amendment would be futile. See, e.g., Leadsinger, Inc. v. BMG Music Pub., 512 F.3d 522, 532 (9th Cir. 2008) (reiterating that a district court may deny leave to amend for, among other reasons “repeated failure to cure deficiencies by amendments previously allowed . . . [and] futility of amendment”); Gardner v. Martino, 563 F.3d 981, 990 (9th Cir. 2009) (Leave to amend may be denied “where the amendment would be futile.”).


         First, because the First Amended Complaint fails to timely allege any TILA-based claim upon which relief can be granted, all time-barred claims are dismissed with prejudice. Second, as to the non-TILA claims, the FAC suffers from many of the same deficiencies previously identified in the Court's August 7, 2017 Order dismissing the Verified Complaint with limited leave to amend-those claims are likewise time-barred, fail to state claims for relief, and fall short of the pleading standards of Federal Rule of Civil Procedure Rule 8. Because the FAC makes no factual allegations against BANA, does little more than attempt to bring new TILA-related claims against Countrywide and/or the Fay Defendants, and this Court has already determined that the TILA claims are time-barred, the Court finds that further leave to amend is futile, and the FAC is DISMISSED WITH PREJUDICE.[3]

         I. The Untimely TILA Claims Are Dismissed With Prejudice

         As before, Plaintiffs' TILA claims are time-barred as a matter of law. Further, even if timely, the FAC fails to plausibly allege claims for violation of the cited provisions as to BANA, MERS, and the Fay Defendants who did not originate Plaintiffs' loan. Defendants' Motions are therefore granted and all time-barred TILA claims are once more dismissed with prejudice.

         The FAC asserts that the following disclosure requirements were not met, dating to the loan origination on December 11, 2007-

5. On or about December 11, 2007, the Countrywide Defendant did not fully disclose the fact that there would be an escrow account formed to take in taxes and insurance on a monthly basis, which now affects all Defendants.
6. On or about December 11, 2007, the Countrywide Defendant padded the escrow amount, which now affects all Defendants.
7. On or about December 11, 2007, the Countrywide Defendant failed to give to the Plaintiff a proper Notice of Right to Cancel form, any mention of “right to cancel” (if given at all) did not disclose dates of proper consummation and by which date the Plaintiff could rescind. The Countrywide Defendant also failed to obtain the Plaintiff's signature on that form, evidencing that the Defendant delivered such document mentioned above in number 5, which now affects all Defendants.
8. On or about December 11, 2007, the Countrywide Defendant failed to give to the Plaintiff Defendant's receipt that the Note was deposited into Plaintiff's Account, which now affects all Defendants.
9. Plaintiff also seeks recovery for damages for non-disclosure of Plaintiff's right to cancel, non-disclosure of certain Truth in Lending disclosures and Federal violations of numerous consumer rights relative to the TILA and RESPA disclosures, which now affects all Defendants.
10. On or about December 11, 2007, Plaintiff and the Countrywide Defendant purported to execute a Mortgage and Note, purported loan number 182078358. The said purported Mortgage and Note were never consummated by both parties signing therein. Defendant never during the duration of the purported loan transaction, within a reasonable amount of time, ever gave the Plaintiff a signed copy of the purported Mortgage and note and mandated TILA and RESPA disclosures, which now affects all Defendants.
11. Either before, during and/or after the purported settlement, the Countrywide Defendant failed and/or refused to provide Plaintiff with copies of important documents, including the complete Mortgage and Note, which would explain Plaintiff's consumer rights, as well as other rights, including but not limited to, the right to cancel the contract and the Federal Truth in Lending Disclosures, such as the preliminary TILA disclosures, which now affects all Defendants.
12. The Countrywide Defendant also intentionally failed and/or refused to provide Plaintiff various disclosures that would indicate to Plaintiff that the contract entered into was void and illegal. For instance, Defendant failed to disclose that the loan obtained had an interest rate that did ...

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