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The Bank of New York Mellon FKA v. Perry

United States District Court, D. Hawaii

September 11, 2018

LEN C. PERRY JR., an individual; NATHAN JON LEWIS, an individual; and 3925 KAMEHAMEHA RD PRINCEVILLE, HI 96722, LLC, a Hawaii limited liability corporation, Defendants.




         The Bank of New York Mellon (“BONY Mellon”) moves for summary judgment on its claims for quiet title and slander of title, and request for declaratory relief against Defendants Len C. Perry, Nathan J. Lewis, and 3925 Kamehameha Rd Princeville, HI 96722, LLC (the “LLC”). The claims arise from Defendants' improper and fraudulent recordings, which have clouded title to Plaintiff's real property and interfered with its property rights. Defendants, without proper legal authority, filed financing statements misrepresenting debts owed by BONY Mellon, and eventually, recorded deeds purporting to convey title to themselves. Because Defendants falsely held themselves out as owners of record of the property, and deprived Plaintiff of the ability to market, sell and/or collect rent from the property, BONY Mellon continues to incur damages. The uncontroverted summary judgment record establishes that Defendants have no legal basis for claiming title to the property, which is undisputedly vested in BONY Mellon, and accordingly, the Court GRANTS the Motion for Summary Judgment on the second, third, and fifth claims for relief in the Complaint.


         I. Factual Background

         BONY Mellon was the foreclosing mortgagee on a Mortgage issued to non-party borrowers who had defaulted on their loan. The $1, 129, 500 loan to the borrowers was secured by a Mortgage on real property in Princeville, Kauai (the “Property”) that was recorded on July 15, 2005 in the State of Hawaii Bureau of Conveyances. Ex. A (Mortgage), Dkt. No. 52-2.[1] After the borrowers failed to make their monthly payments due under the loan, BONY Mellon foreclosed on the Property in a judicial foreclosure action, and the Property was conveyed to BONY Mellon following the sale. Ex. B (8/14/15 Decree of Foreclosure & Order Confirming Foreclosure Sale), Dkt. No. 52-3; Ex. C (9/28/16 Am. Order Confirming Foreclosure Sale), Dkt. No. 52-4. On October 19, 2016, a Commissioner's Deed was recorded transferring title to the Property in fee simple to BONY Mellon. Ex. D (Commissioner's Deed), Dkt. No. 52-5.

         During the same time period, Defendants recorded a number of fraudulent documents in the State of Hawaii Bureau of Conveyances that purported to transfer legal title to the Property to Defendants. On April 26, 2016, for example, Perry recorded a “Notice of Default/Notice of Fault - Opportunity to Cure - Default Affidavit” (“Notice of Fault”) in the Bureau of Conveyances.[2] Ex. E (Notice of Fault), Dkt. No. 52-6. The Notice of Fault was recorded without BONY Mellon's knowledge, consent, or agreement. Decl. of Caroline Trinkley ¶¶ 13-15, Dkt. No. 52-1. BONY Mellon contends that its silence or failure to respond to Perry's purported “Bonafide Offer/Offer of Performance/Notice of Tender” to purchase the Property, is not, and was not, a concession or admission that it acquiesced to anything presented in the Notice of Fault. Nor did BONY Mellon accept any purchase offer by Perry, or any other Defendant, or make any implicit or explicit admission regarding the statements in Perry's correspondence. Trinkley Decl. ¶¶ 14-15.

         On June 27, 2016, Perry recorded a UCC Financing Statement (“First UCC Statement”) in the Bureau of Conveyances in which he listed himself as both the Debtor and Secured Party in relation to collateral described as “Registered Lien # 1A59600612 for $3, 981, 377.”[3] Ex. F (First UCC Statement), Dkt. No. 52-7. On July 26, 2016, Perry recorded an amendment to the First UCC Statement in the Bureau of Conveyances. Ex. G (Am. First UCC Statement), Dkt. No. 52-8. The First UCC Statement and amendment were recorded without BONY Mellon's knowledge, consent, or agreement, and the UCC-1 statements falsely identified BONY Mellon as a debtor. Trinkley Decl. ¶¶ 16-18.

         Perry recorded several documents with the Bureau of Conveyances on August 22, 2016, again without BONY Mellon's knowledge or consent. He recorded a “Notice of Lien Affidavit and Notice of Default, ” in which Perry claims that BONY Mellon is indebted to him in the amount of $3, 981, 377.19 due to its “fail[ure] to answer the.... Private Administrate Inquiry” and its “documented attempts to deny and deprive [Perry] of his rights and property[.]” Ex. I (Notice of Lien Affidavit), Dkt. No. 52-10. Perry also recorded a “Substitution of Trustee and Full Reconveyance, ” asserting that he is the “Beneficiary, under that certain claim number 3925KamehamehaPVH Notice of Default” and that RCO Hawaii, LLLC and Plaintiff are the “Trustee(s)” Ex. H (Substitution and Reconveyance), Dkt. No. 52-9. Perry, acting as Beneficiary, purported to designate the LLC Defendant as “Foreclosure Trustee and [to] hereby RECONVEY thereunder.” Id. Defendants also recorded another amended UCC financing statement in the Bureau of Conveyances, without Plaintiff's knowledge or consent. Ex. J. (Am. UCC Statement), Dkt. No. 52-11.

         On September 14, 2016, Defendants recorded an “Affidavit of Foreclosure” in which Lewis purported to act as the “foreclosure trustee” pursuant to a “Financing Statement Lien” recorded on July 27, 2016. Ex. K (Aff. of Foreclosure), Dkt. No. 52-12. The Affidavit of Foreclosure, filed without BONY Mellon's knowledge, purports to foreclose on the Lien and take the Property as collateral for the benefit of Perry. Id. The LLC is purportedly substituted “as to the Trustee to liquidate said trust with a Substitution and Full Re-Conveyance Notice, ” and the “Trustee, substituted [LLC] is moving in accordance with federal and Hawaii Statutes carrying out the Non-Judicial Foreclosure.” Id.[4]

         On October 14, 2016, Defendants recorded another UCC Financing Statement (“Second UCC Statement”) in the Bureau of Conveyances, listing BONY Mellon as the debtor, the Defendant LLC as the secured party with Lewis as an additional secured party, and listing the collateral as the Affidavit of Foreclosure recorded on September 14, 2016, with a total collateral debt of $3, 981, 377.19. Ex. L. (Second UCC Statement); Dkt. No. 52-13 On November 9, 2016, the LLC recorded in the Bureau of Conveyances a Warranty Deed (“Perry Warranty Deed”) purporting to transfer title to the Property from the LLC to Perry. Ex. M, Dkt. No. 52-14. Then, on January 10, 2017, Perry recorded a conveyance (“Lewis Warranty Deed”) whereby Perry, as grantor, purportedly transferred title to the Property to Lewis, as grantee. Ex. N, Dkt. No. 52-15.

         According to BONY Mellon, it is not indebted to Defendants, and never owed Defendants $3, 981, 377.19 or any other sum of money. BONY Mellon did not receive any monies, benefit, value, or consideration for the purported conveyances of the Property to Defendants, and did not ever authorize or intend for any Defendant to record any documents relating to the Property. BONY Mellon only became aware of Defendants' fraudulent recordings when its agent, New Penn Financial, LLC dba Shellpoint Mortgage Servicing, as attorney-in-fact, began to attempt to market the Property for sale and discovered Defendants' purported “tenants” residing at the Property. Trinkley Decl. ¶¶ 33-34.

         Plaintiff asserts that the Perry and Lewis Warranty Deeds currently prevent it from taking possession of the Property, selling the Property with free and clear title, and collecting any rents on the Property. Trinkley Decl. ¶ 35. According to Plaintiff, these filings have slandered BONY Mellon's title and impaired its use and enjoyment of the Property.

         II. Procedural Background

         BONY Mellon filed this action on June 21, 2017, seeking cancellation of certain instruments based on Defendants' improper and fraudulent recordings in the land records relating to Plaintiff's title to real property, including the deeds purporting to convey title to Defendants. See Compl., Dkt. No. 1. The Complaint asserts five claims against Defendants for cancellation of instruments, quiet title, slander of title, unjust enrichment, and declaratory judgment. Compl. ¶¶ 39-93.[5]

BONY Mellon seeks summary judgment on its second, third, and fifth causes of action for quiet title, slander of title, and declaratory relief. It contends that Defendants' claim to title, premised on a “Notice of International Claim within the Admiralty Administrative Remedy, ” is unenforceable. Lewis and Perry did not file timely oppositions to the Motion.[6]


         Because Defendants 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 ...

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