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Amina v. WMC Finance Co.

United States District Court, D. Hawaii

July 5, 2018

WMC FINANCE CO., et al., Defendants.




         In an effort to invalidate a mortgage that is currently the subject of a pending foreclosure action, the Aminas, proceeding pro se, bring claims against several creditors and/or servicing entities alleging violations of federal and state law. This is the Aminas' third action filed in this district court concerning this mortgage transaction. Defendants seek dismissal of the Aminas' claims under the doctrines of claim and issue preclusion or, alternatively, for failure to state a claim. Because the requirements of claim and issue preclusion have been met, and because Plaintiffs' claims are additionally time-barred or fail to state a claim, the Court GRANTS Defendants' Motions. Plaintiffs are granted limited leave to amend claims that are not precluded or time-barred, with instructions below.


         The Aminas bring claims against JPMorgan Chase Bank, N.A. (“Chase”), [1]Mortgage Electronic Registration Systems, Inc. and MERSCORP Holdings, Inc. (collectively, “MERS”), Nationwide Title Clearing, Inc. (“NTC”), and WMC Finance Co., [2] asserting eight causes of action: a quiet title claim; a Fair Debt Collection Practices Act claim (“FDCPA”); a Real Estate Settlement Procedures Act claim (“RESPA”); an accounting claim; an Unfair and Deceptive Trade Practices claim under HRS Chapter 480 (“UDAP”); a Relief From Judgment claim under FRCP 60; a Truth In Lending Act claim (“TILA”); and a Declaratory Judgment claim. Chase and MERS filed a Motion to Dismiss, Dkt. No. 14, and NTC filed a substantive joinder in that Motion, Dkt. No. 26.

         In light of the substantial record of litigation involving the Aminas' property and subject loans, the Court first recounts the earlier lawsuits between the parties, before addressing the present claims.

         I. Prior Lawsuits

         The Aminas' claims relate to the same Mortgage on their real property, located at 2304 Metcalf Street #2, Honolulu, Hawaii 96822 (“Property”) that is at issue in a pending foreclosure proceeding[3] and in two prior matters in this district court that were decided in defendants' favor.[4] See Compl. ¶ 203, Dkt. No. 1-1. On March 20, 2010, the Aminas filed the first lawsuit, Melvin Keakaku Amina, et al. v. WMC Mortgage, Corp. et al., Civil No. 10-00165 JMS-KSC (the “First Lawsuit”). The second case, entitled Melvin Keakaku Amina, et al. v. The Bank of New York Mellon, fka The Bank of New York, et al., Civil No. 11-00714 JMS-BMK (the “Second Lawsuit”), was filed on November 28, 2011. Those cases challenged the validity of their Mortgage and sought to quiet title.

         A. The First Lawsuit

         In the First Lawsuit, the Aminas alleged claims against Defendants WMC Mortgage LLC, General Electric Company (“GE”), MERS, Chase Home Finance LLC and Chase Home Finance, Inc., and LCS Financial Services Corporation for seeking to quiet title and for violations of TILA, RESPA, the FDCPA, the Fair Credit Reporting Act (“FCRA”), and state law. The Aminas' claims arose from a mortgage transaction backing two loans from WMC-one for $880, 000, and another for $220, 000-and a threatened foreclosure of the Property located at 2304 Metcalf Street # 2, Honolulu, Hawaii 96822. See Amina, 2011 WL 1869835, at *1 (D. Haw. May 16, 2011). The district court, in the Second Lawsuit, summarized the proceedings in the First Lawsuit as follows:

The court addressed two rounds of dispositive motions, including (1) granting WMC and GE's Motion for Judgment on the Pleadings and granting LCS's Motion for Summary Judgment, 2011 WL 1869835 (D. Haw. May 16, 2011); and (2) granting WMC and GE's Motion to Dismiss Second Amended Complaint, 2011 WL 3841001 (D. Haw. Aug. 26, 2011).
After this motions practice, several of Plaintiffs' claims in their May 31, 2011 Second Amended Complaint still stood, including a claim for quiet title against MERS entities, Chase entities, and “Unknown Owners.” Civ. No. 1000165 JMS-KSC, Doc. No. 87, SAC Count II. This claim asserted that MERS entities and Chase entities have all falsely claimed a right to the subject property, and that Plaintiffs are entitled to ownership of the subject property without interference by Defendants. Id. ¶¶ 150, 152-55.
In the meantime, motions for summary judgment were filed by the remaining Defendants. Doc. Nos. 118, 121. While these Motions were pending, Plaintiffs stopped participating in this action, resulting in its dismissal with prejudice. See 2012 WL 612463, at *3 (D. Haw. Feb. 24, 2012). This dismissal was affirmed on appeal, and the mandate issued on June 16, 2014. Doc. No. 175.

         2015 WL 84760, at *3 (D. Haw. Jan. 7, 2015), aff'd, 694 Fed.Appx. 492 (9th Cir. 2017). The Ninth Circuit affirmed the district court's dismissal with prejudice of the First Lawsuit. 554 Fed.Appx. 555 (9th Cir. 2014).

         B. The Second Lawsuit

         In the Second Lawsuit, the Aminas filed their original complaint against Bank of New York Mellon (“BONY”) on November 28, 2011, their First Amended Complaint on June 5, 2012, and their Second Amended Complaint adding U.S. Bank N.A. as a defendant on October 19, 2012.[5] After motions practice, the issue on summary judgment in the Second Lawsuit was narrowed to “whether Plaintiffs entered into the mortgage loan at issue, ” and its validity. 2015 WL 84760, at *4 (D. Haw. Jan. 7, 2015). The district court's order granting defendants' motion for summary judgment found both that the Mortgage was validly transferred to U.S. Bank and also that the Aminas were not entitled to quiet title. The district court explained the Mortgage transactions at issue in the litigation:

Throughout the pendency of both the First Action and this action, there was no dispute that Plaintiff entered into two mortgage loans on the subject property with WMC in 2006. (The mortgage loan for $220, 000 has been released, leaving the one for $880, 000 at issue.) Indeed, the Complaint in the First Action (which included WMC as a Defendant) recited that Plaintiffs entered into these two mortgage loans with WMC, and asserted claims based upon alleged improprieties by WMC and WMC's loan documents. See Civ. No. 10-00165 JMS-KSC, Doc. No. 1, Compl. ¶¶ 38-81. And in this action, the parties have focused not on whether Plaintiffs ever entered into mortgage loans on the subject property, but rather whether these mortgage loans were transferred to U.S. Bank. See, e.g., 2012 WL 3283513, at *5 (explaining that Plaintiffs assert “that Defendant is not a mortgagee and that there is no record evidence of any assignment of the mortgage loan to Defendant”); 2013 WL 1385377, at *3 (same).

         2015 WL 84760, at *4. Turning to the merits of the claims, the district court determined that “U.S. Bank is the mortgagee on the mortgage loan on the subject property, ” based upon the following evidence in the summary judgment record:

Defendants have presented evidence that in June 2006, Plaintiffs' mortgage loan was transferred to JP Morgan Trust pursuant to the PSA, as is shown in the Mortgage Loan Schedule for the JP Morgan Trust listing Plaintiffs' mortgage loan. See Doc. No. 141-1, Alegria Decl. ¶¶ 5-6; Doc. No. 142-2, Defs.' Ex. D (PSA); Doc. No. 158, Defs.' Ex. E at 1, 43 (loan schedule). Plaintiffs' $880, 000 mortgage loan is identified in the Loan Schedule by the Loan ID number ****1019, which also appears on the upper left-hand corner of the note and mortgage. Doc. No. 141-1, Alegria Decl. ¶ 6; see also Doc. No. 158, Defs.' Ex. E at 1, 43; Doc. No. 142-1, Defs.' Ex. C (Balloon Note for $880, 000); Doc. No. 141-5, Defs.' Ex. B (mortgage on subject property referring to Balloon Note for $880, 000). Further, on April 4, 2012, an assignment of mortgage from MERS, as nominee for WMC, its successors, and assigns, to U.S. Bank (again, as trustee for the JP Morgan Trust), was recorded in the Hawaii Bureau of Conveyances. See Doc. No. 142-4, Defs.' Ex. F. Finally, Defendants present a copy of the Note, endorsed in blank, and Alegria asserts that JP Morgan Chase has possession of it. Doc. No. 141-1, Alegria Decl. ¶ 4; Doc. No. 142-1, Defs.' Ex. C. This evidence supports the conclusion that U.S. Bank is the mortgagee on the mortgage loan on the subject property.

         2015 WL 84760, at *6. The court rejected the Aminas' challenge to the validity of the transfer based upon the various assignments of the Mortgage and the Pooling and Servicing Agreement, holding:

it is well-established that a borrower, who is a third party to the PSA and assignment, lacks standing to challenge their validity. . . . Plaintiffs are not parties to either of them, and therefore do not have standing to challenge them. See also Abubo v. New York Mellon, 2011 WL 6011787, at *8 (D. Haw. Nov. 30, 2011) (rejecting argument that assignment is invalid on two bases “(1) because a third party lacks standing to raise a violation of a PSA, or (2) because noncompliance with terms of a PSA is irrelevant to the validity of the assignment (or both)”); Nottage v. Bank of New York Mellon, 2012 WL 5305506, at *5 (D. Haw. Oct. 25, 2012) (same); Benoist v. U.S. Bank Nat'l Ass'n, 2012 WL 3202180, at *5 (D. Haw. Aug. 3, 2012) (same).

         2015 WL 84760, at *8-9. Upon granting defendants' motion for summary judgment, the court entered judgment and closed the case. The Ninth Circuit affirmed the district court's rulings on the motions to dismiss and for summary judgment. 694 Fed.Appx. 492, 494 (9th Cir. 2017).

         II. Plaintiffs' Current Action

         On March 15, 2018, the Aminas initiated this civil action against the Chase Defendants, MERS, and WMC, attacking the same Mortgage as the prior lawsuits: “On 3/6/2006, [the] Mortgage was recorded with the State of Hawaii Bureau of Conveyances as Document No. 2006-042511. Plaintiffs never applied for the loan described in the Note which was filed as Document No. 142-1 and as Document 144-4 in Case No. 1:11-cv-00714 JMS-BMK.” Compl. ¶¶ 225-226. They again challenge the Assignment of Mortgage:

244. Taking the Alegria Declaration to be true, after June, 2006, and specifically on 3/22/2012, the Loan no longer belonged to any successor or assign of WMC Mortgage Corp.
245. Therefore, the ASSIGNMENT OF MORTGAGE is invalid and void for lack of authority. You can't sell something you don't own.
246. The Assignment was created and recorded during litigation - specifically, Case No. 11-00714 JMS-BMK in the USDC Hawaii, which was filed on 11/28/2011.

         Compl. ¶¶ 244-246.

         The Aminas allege eight causes of action in their 479-paragraph Complaint, each directed at voiding their loan on the Property or invalidating Defendants' rights under the Mortgage and Note. The Complaint also seeks to distinguish this case from the prior litigation, despite referring extensively to the facts and documents underlying the First and Second Lawsuits:

1. New facts exist since the date of filing of the most recent lawsuit. . . .
2. This lawsuit is against different parties than the most recent lawsuit.
3. None of the Defendants is the (or a) mortgagee [sic]. ****
7. The Mortgage recorded as Document No. 2006-042511 and the Note which was filed as Document No. 142-1 (and also as Document 144-4) in Case No. 1:11-cv-00714 JMS-BMK will be collectively referred to as “the disputed loan” or “the loan in dispute.”
8. Plaintiffs are interested in the Pooling and Servicing Agreement (PSA), not because of any attempt to “challenge” it or to hold parties to account for breaking its terms, but for the purpose of identifying the true owner of the disputed loan.
9. Plaintiffs seek declaratory judgment that none of the Defendants may foreclose, because only the original beneficiary of a deed of trust or its assignee or agent may direct the trustee to sell the property.
10. Plaintiffs made payments to CHASE that were not credited to Plaintiffs' account and were not forwarded to the proper party.
11. Unlike in most cases, Plaintiffs have standing to challenge the validity of the Assignment because, if the Assignment is not valid, then the proper party has fully been paid off, and Plaintiffs are not in default.

         Compl. (footnote omitted).

         Among other relief, the Complaint asks that the Court declare that “Plaintiffs have clear title to the property, free from any encumbrances by Defendants, and that Defendants have no valid security interest in Plaintiffs' property.” Compl. ¶ 475. Plaintiffs also seek to enjoin all Defendants from “selling, assigning or transferring mortgages or obligations relating to the [Property]; from instituting, prosecuting or maintaining nonjudicial or judicial foreclosure proceedings against the [Property], ” Compl. ¶ 475, or “otherwise taking any steps to deprive Plaintiffs of ownership and/or enjoyment of their home.” Id.

         Chase Defendants and MERS seek dismissal of the Complaint based upon claim and issue preclusion principles or, alternatively, because the Aminas' claims are both time-barred and fail to state plausible claims for relief. NTC filed a substantive joinder asking that the Complaint be dismissed with prejudice.[6]


         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 district court may consider the affirmative defenses of claim or issue preclusion on a Rule 12(b)(6) motion to dismiss.” Fairbank v. Underwood, 986 F.Supp.2d 1222, 1231 n.5 (D. Or. 2013); Thompson v. Cty. of Franklin, 15 F.3d 245, 253 (2d Cir. 2004) (noting that res judicata challenges may be considered in a motion to dismiss for failure to state a claim under Rule 12(b)(6)); Scott v. Kuhlmann, 746 F.2d 1377, 1378 (9th Cir. 1984) (res judicata properly raised in motion to dismiss when there are no disputed issues of fact); Day v. Moscow, 955 F.2d 807, 811 (2d Cir. 1992) (res judicata may be sustained on a Rule 12(b)(6) motion when relevant facts are shown by court records); see also Rainwater v. Banales, 2008 WL 5233138, at *9 n.6 (C.D. Cal. 2008) (leave to amend may be denied as futile when the claims would be barred by res judicata or collateral estoppel).

         A court may consider certain documents attached to a complaint, as well as documents incorporated by reference in the complaint, or matters of judicial notice, without converting a Rule 12(b)(6) motion to dismiss into a motion for summary judgment. United States v. Ritchie, 342 F.3d 903, 908-09 (9th Cir. 2003). As noted above, the Court takes judicial notice of the pleadings, court orders, and other public records attached ...

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