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U.S. Bank Trust, N.A. v. Fonoti

United States District Court, D. Hawaii

June 29, 2018

U.S. BANK TRUST, N.A., AS TRUSTEE FOR LSF8 MASTER PARTICIPATION TRUST, Plaintiff,
v.
TALA RAYMOND FONOTI;, Defendants.

          (1) ORDER ON REMOVING PARTIES' MOTION TO RECONSIDER MAGISTRATE JUDGE'S FINDINGS AND RECOMMENDATIONS; AND (2) AMENDED FINDINGS AND RECOMMENDATION TO GRANT: (A) STATE OF HAWAI‘I OFFICE OF CONSUMER PROTECTION'S MOTION FOR ORDER REMANDING ACTION TO STATE COURT; AND (B) PLAINTIFF U.S. BANK TRUST, N.A.'S SUBSTANTIVE JOINDER TO STATE OF HAWAI‘I OFFICE OF CONSUMER PROTECTION'S MOTION FOR ORDER REMANDING ACTION TO STATE COURT FILED APRIL 5, 2018

          KENNETH J. MANSFIELD UNITED STATES MAGISTRATE JUDGE

         Respondent David Keanu Sai (“Sai”) filed his Notice of Removal of the instant action on March 27, 2018. See ECF No. 1. On April 2, 2018, Sai filed an Amended Notice of Removal. See ECF No. 6. Based on the original March 27, 2018 Notice of Removal, the State of Hawai‘i Office of Consumer Protection (“State”) filed its Motion for Order Remanding Action to State Court on April 5, 2018 (“Motion to Remand”). See ECF No. 7. On April 12, 2018, U.S. Bank Trust, N.A., as Trustee for LSF8 Master Participation Trust (“U.S. Bank Trust”) filed “Plaintiff's Substantive Joinder to State Of Hawaii Office of Consumer Protection's Motion for Order Remanding Action to State Court Filed April 5, 2018” (“Joinder”). See ECF No. 13. On April 27, 2018, Sai and Respondent Dexter Kaiama (“Kaiama”) (collectively, “Respondents”) filed “Respondents Sai and Kaiama's Memorandum in Opposition to Motion for Order Remanding Action to State Court Filed April 5, 2018” (“Opposition”). See ECF No. 33.

         The Court elected to decide the Motion to Remand without a hearing pursuant to Rule 7.2(d) of the Local Rules of Practice for the United States District Court for the District of Hawaii. On May 8, 2018, this Court issued its Findings and Recommendations to Grant: (1) the Motion to Remand; and (2) the Joinder (May 8, 2018 F & R). On May 11, 2018, the State filed Objections to the May 8, 2018 F & R. See ECF No. 37. On May 16, 2018, Respondents filed “Removing Parties' Submission of Newly Discovered Expert Opinion Evidence on the Issue of the Continuing Existence of the Hawaiian Kingdom as a Subject of International Law Under Illegal Military Occupation by the United States Government and Its Fraudulent Annexation” (“Supplemental Brief”).

         On May 17, 2018, the State filed a Reply to Respondents' Supplemental Brief. See ECF No. 41. On May 20, 2018, Respondents filed Removing Parties' Motion to Reconsider Magistrate Judge's Findings and Recommendations pursuant to Local Rule 60.1 (“Motion to Reconsider”), seeking reconsideration of the May 8, 2018 F & R. Respondents contend that there are new material facts not previously available to the Respondents, and that the May 8, 2018 F & R fails to make any findings and recommendations regarding the basis for their removal in their Amended Notice of Removal. Respondents' “new information” is a memorandum authored by a Dr. Alfred M. deZayas (“deZayas Memorandum”), who Respondents represent is a “United Nations Independent Expert on the promotion of a democratic and equitable international order under the Office of the High Commissioner for Human Rights.” See ECF No. 40 at 2.

         Accordingly, Respondents ask this Court to reconsider its May 8, 2018 F & R. The State filed its Opposition to the Motion to Reconsider on June 7, 2018. ECF No. 48. Respondents filed their Reply on June 21, 2018. ECF No. 50.

         First, the Court notes that the State's position is that this case is properly with the district judge assigned to this case because the State filed a limited objection to this Court's May 8, 2018 F & R. As such, the State argues in its Opposition to the Motion to Reconsider that the Motion to Reconsider should be properly construed as an objection to this Court's May 8, 2018 F & R. This Court disagrees.

         Pursuant to Local Rule 72.4, a district judge may designate a magistrate judge to hear and determine a motion to remand, and to submit to a district judge of the court, related to the motion to remand, “proposed findings of fact and recommendations for disposition by a district judge.” LR72.4(a)(9). The district court assigned to this action submitted to this Court the Motion to Remand, to propose findings of fact and recommendations to the district judge for disposition of the Motion to Remand. Upon this Court's issuance of the May 8, 2018 F & R, the parties had fourteen (14) days after service to object to the May 8, 2018 F & R. LR74.2. The Local Rules also permit the parties to move for reconsideration before the magistrate judge pursuant to Local Rule 60.1. Id. These actions are not mutually exclusive. Indeed, a reconsideration tolls the time in which objection must be filed to a magistrate judge's findings or recommendations. Id.

         The State does not provide any legal basis for its contention that the filing of its limited objection to the May 8, 2018, “triggered de novo review” by district judge assigned to this case, thus presenting jurisdictional barriers to this Court's consideration of Respondent's Motion for Reconsideration. Nor will this Court construe what is titled and presented as a motion for reconsideration by Respondents as an objection. Accordingly, this Court rejects the State's contention that its objection to this Court's May 8, 2018 F & R “had the effect” of “moving this case” to the district judge assigned to this case.

         Second, Respondents argue in their Reply that the State's Motion to Reconsider Opposition is untimely. See ECF No. 50 at 2. Respondents contend that the State filed its Motion to Reconsider Opposition 18 days after the Motion to Reconsider, and thus, pursuant to Local Rule 7.4, the Court should disregard or strike the Opposition from the record. Id. As a general rule, parties must file their oppositions and replies pursuant to the deadlines set in Local Rule 7.4. Local Rule 7.4 provides that an opposition to a non-hearing motion shall be served and filed not more than 14 days after service of the motion. In this case, however, the Court set the Opposition and Reply deadline. Pursuant to the Entering Order issued by this Court on May 21, 2018, the Court set the State's deadline to file its Opposition to the Motion to Reconsider for June 7, 2018. See ECF No. 46. The State timely filed its Opposition on June 7, 2018. Accordingly, Respondents' argument is unavailing.

         Finally, Respondents request reconsideration of this Court's May 8, 2018 F & R based on “newly-discovered evidence, ” namely, the deZayas Memorandum Respondents contend they obtained on May 10, 2018. See ECF No. 40 at 2. Motions for reconsideration may be brought only upon the following grounds pursuant to Local Rule 60.1: “(a) Discovery of new material facts not previously available; (b) Intervening change in law; [and] (c) Manifest error of law or fact.” LR60.1. Respondents contend that the deZayas Memorandum is “newly-discovered evidence on the issue of the continuing existence of the Hawaiian Kingdom as a subject of international law under an illegal military occupation by the United States government and its fraudulent annexation.” ECF No. 40 at 2. The Court finds that the deZayas Memorandum does not provide a sufficient basis for this Court's reconsideration of its May 8, 2018 F & R.

         The Court found in its May 8, 2018 that Sai's March 27, 2018 Notice of Removal was untimely. The Court is unable to discern how the deZayas Memorandum constitutes any of the grounds listed in Local Rule 60.1. The deZayas Memorandum does not contain any information related to the timeliness of the Notice of Removal, and thus, does not have any bearing on the reasons this Court provided for recommending that the district court remand this action. In addition, the memorandum is not “material, ” does not demonstrate a relevant intervening change in law, nor does it evince that this Court made a manifest error of law or fact regarding the timeliness of the original Notice of Removal. Accordingly, the Court finds that the deZayas Memorandum does not provide a sufficient basis for this Court to reconsider its May 8, 2018 F & R.

         The Court recognizes, however, that Respondent Sai filed an Amended Notice of Removal after the original Notice of Removal, containing a different basis for removal than that asserted in the original Notice of Removal. Neither the State nor this Court addressed the merits of Sai's assertions in the Amended Notice of Removal. Accordingly, the Court finds it proper to consider Respondents' request to reconsider its May 8, 2018 F & R so that the Court may include a discussion of the Amended Notice of Removal.

         In the interest of judicial economy pursuant to Federal Rule of Civil Procedure 1, however, instead of granting Respondents' motion to reconsider its May 8, 2018 F & R, the Court issues the following Amended Findings and Recommendation, which supersedes this Court's May 8, 2018 F & R. Any objections to or motions to reconsider the Amended Findings and Recommendations may be filed in accordance with the Local Rules.

         The Court also advises the parties that any objections to or motions to reconsider the Amended Findings and Recommendations may not refer or incorporate by reference any previous filings, including, but not limited to, any previously filed objections or motions to reconsider. Any objections or motions for reconsideration must solely concern the following Amended Findings and Recommendations, and not the superseded May 8, 2018 F & R.

         AMENDED FINDINGS AND RECOMMENDATION TO GRANT: (1) STATE OF HAWAI‘I OFFICE OF CONSUMER PROTECTION'S MOTION FOR ORDER REMANDING ACTION TO STATE COURT; AND (2) PLAINTIFF U.S. BANK TRUST, N.A.'S SUBSTANTIVE JOINDER TO STATE OF HAWAI‘I OFFICE OF CONSUMER PROTECTION'S MOTION FOR ORDER REMANDING ACTION TO STATE COURT FILED APRIL 5, 2018

         Respondent David Keanu Sai (“Sai”) removed the instant action on March 27, 2018. See ECF No. 1. On April 2, 2018, Sai filed an Amended Notice of Removal. See ECF No. 6. The State of Hawai‘i Office of Consumer Protection (“State of Hawai‘i”) filed its Motion for Order Remanding Action to State Court on April 5, 2018 (“Motion to Remand”). See ECF No. 7. On April 12, 2018, U.S. Bank Trust, N.A., as Trustee for LSF8 Master Participation Trust (“U.S. Bank Trust”) filed “Plaintiff's Substantive Joinder to State Of Hawaii Office of Consumer Protection's Motion for Order Remanding Action to State Court Filed April 5, 2018” (“Joinder”). See ECF No. 13. On April 27, 2018, Sai and Respondent Dexter Kaiama (“Kaiama”) (collectively, “Respondents”) filed “Respondents Sai and Kaiama's Memorandum in Opposition to Motion for Order Remanding Action to State Court Filed April 5, 2018” (“Opposition”). See ECF No. 33.

         The Court elected to decide the Motion to Remand without a hearing pursuant to Rule 7.2(d) of the Local Rules of Practice for the United States District Court for the District of Hawaii. The Court has carefully reviewed the State of Hawaii's Motion to Remand, U.S. Bank Trust's Joinder, and Respondents' Opposition. Based on the memoranda, the record in this case, and applicable case law, the Court FINDS and RECOMMENDS that the district court remand this action.

         BACKGROUND

         On January 23, 2018, the State of Hawai‘i filed a motion seeking leave to intervene in a foreclosure action (“Motion to Intervene”) in the Circuit Court of the First Circuit State of Hawai‘i (“State Court”) initiated by U.S. Bank Trust against Tala Raymond Fonoti and Willadean Lehuanani Grace (collectively, “Defendant homeowners”). See ECF No. 1-1 at 5. The State of Hawai‘i also sought leave to add Rose Dradi (“Dradi”) and Respondents as parties to the foregoing foreclosure action in State Court (“Foreclosure Action”). Id. at 6. The State of Hawai‘i alleged in its Motion to Intervene that the purpose of petitioning the State Court for leave in the Foreclosure Action was to seek relief for “the unlawful and deceptive conduct, including but not limited to engaging in mortgage rescue [sic] fraud, of said new parties done in connection with the instant foreclosure action to the detriment of the Defendant homeowners.” Id.

         The State of Hawai‘i also filed an Ex Parte Motion for Issuance of an Order Directing Respondents Rose Dradi, David Keanu Sai, and Dexter Kaiama to Appear and Show Cause Why They Should Not Be Found to Have Violated Applicable Consumer Protection Laws on January 23, 2018 (“Motion to Issue Show Cause Order”). See ECF No. 7-2. The State Court granted the State of Hawaii's Motion to Intervene and Motion to Issue Show Cause Order on January 25, 2018. See ECF No. 1-1 at 20-21; ECF No. 7-3 at 37. On that same day, the State Court issued its “Order Directing Respondents Rose Dradi, David Keanu Sai, and Dexter Kalama to Appear and Show Cause Why They Should Not Be Found to Have Violated Applicable Consumer Protection Laws and Notice of Hearing” (“Order to Show Cause”). See ECF No. 7-3 at 37.

         The State of Hawai‘i served Kaiama the Motion to Intervene, the Motion to Issue Show Cause Order, and the Order to Show Cause on February 1, 2018. The State of Hawai‘i served Sai the same documents on February 6, 2018. See ECF Nos. 7-4 to 7-5. The State of Hawai‘i contends that the State Court granted the State of Hawai‘i authority to serve Dradi by publication because, despite its efforts, the State of Hawai‘i has been unable to personally serve Dradi. ECF No. 7-1 at 10.

         On February 21, 2018, Kaiama filed a “Motion to Dismiss for Lack of Subject Matter Jurisdiction, Pursuant to HRCP Rule 12(B)(1)” in State Court (“Motion to Dismiss”). See ECF No. 1-1 at 23. On March 5, 2018, Sai filed a Memorandum in Support of Kaiama's Motion to Dismiss (“Memo in Support”). See id. at 71. Sai subsequently filed a “Supplemental Memorandum to Deny Joinder and in Support of Motion to Dismiss for Lack of Subject Matter Jurisdiction, Pursuant to HRCP Rule 12(B)(1)” on March 27, 2018 (“Supplemental Memo”). See ECF No. 1-1 at 147.

         Later on March 27, 2018, Sai removed the action to this district court. See ECF No. 1. On April 2, 2018, Sai filed his Amended Notice of Removal. See ECF No. 6.

         A. The March 27, 2018 Notice of Removal

         Sai contends in his March 27, 2018 Notice of Removal that the district court has federal jurisdiction over this action under 28 U.S.C. § 1331 “because the State of Hawai‘i seeks remedies involving Sai who [is] a foreign diplomat.” Id. at 3. Sai asserts that his status as a ...


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