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Gamblin v. Nationstar Mortgage LLC

United States District Court, D. Hawaii

November 7, 2018



          Alan C. Kay Sr. United States District Judge.

         For the reasons set forth below, the Court GRANTS IN PART and DENIES IN PART Defendants Nationstar Mortgage LLC and Federal National Mortgage Association's Motion for Summary Judgment, ECF No. 15, as follows:

1. Defendants' Motion for Summary Judgment on Plaintiffs' quiet title, ejectment, and declaratory relief claims against Nationstar Mortgage LLC and Federal National Mortgage Association is GRANTED;
2. Defendants' Motion for Summary Judgment on Plaintiffs' wrongful foreclosure claims against Nationstar Mortgage LLC and Federal National Mortgage Association is DENIED.


         On June 26, 2008, Bruce J. Cary executed an apartment deed in favor of Plaintiffs Lynda Gamblin and Loni A. Hart (collectively, “Plaintiffs”), conveying to them the real property located at 2895 S. Kihei Road, Apartment 303, Kihei, Hawaii 96753, Tax Map Key (“TMK”) No. (2) 3-9-004-139-0018 (“Property”). Plaintiff's Concise Statement of Facts (“Pl.'s CSF”), Declaration of James J. Bickerton (“Bickerton Decl.”), ECF No. 36-1 ¶ 4; Pl.'s CSF Ex. 2, ECF No. 36-4 at 1-3. In July 2008, Plaintiffs executed a mortgage on the Property in favor of Mortgage Electronic Registration Systems, Inc. as nominee for Mangum Mortgage Inc., its successors and assigns, which was later assigned to Defendant Nationstar Mortgage LLC (“Nationstar”). Compl., ECF No. 1-1 ¶¶ 16, 17; see Defs.' Concise Statement of Facts (“Defs.' CSF”), Declaration of Jade Lynne Ching (“Ching Decl.”), ECF No. 16-1 ¶3; Def.'s CSF Ex. 1, ECF No. 16-2; Bickerton Decl. ¶ 5; Pl.'s CSF Ex. 3, ECF No. 36-5. The mortgage was security for Plaintiffs' performance under a promissory note in the amount of $369, 000.00. Defs.' CSF ¶¶ 1, 2; Id. Ex. 1, at 191.[1] On December 18, 2008, Gamblin executed a quitclaim apartment deed in favor of Hart; that deed was recorded with the State of Hawai`i Bureau of Conveyances (“BOC”) on December 23, 2008. Compl. Ex. A, ECF No. 1-1 at 30-36.[2]

         Plaintiffs assert that, at some point, “part or all of the interest in the mortgage loan had been sold to Fannie Mae [Federal National Mortgage Association], such that while Nationstar claimed to be the mortgagee, Fannie Mae also claimed to be the owner of the mortgage loan.” Compl. ¶ 18. At the hearing on the instant Motion, counsel for Nationstar and Fannie Mae (together, “Defendants”) admitted that Fannie Mae was, at the time of the foreclosure, the beneficial holder of the promissory note, and stated that Nationstar was a servicer acting on Fannie Mae's behalf.

         Plaintiffs defaulted under the promissory note and mortgage. Defs.' CSF ¶ 3; Ching Decl. ¶ 4; Def.'s CSF Ex. 2, ECF No. 16-3. No. notice of acceleration is in the record, but Plaintiffs assert that any notice of acceleration they received was defective in that, “among other omissions, [it] failed to inform Plaintiffs that they in fact had certain rights with respect to reinstatement and/or the sale.” Compl. ¶ 25. On October 20, 2010, Nationstar initiated a non-judicial foreclosure under the power of sale in the mortgage and former Hawaii Revised Statutes (“HRS”) Chapter 667, Part I (2008).[3]Defs.' CSF ¶ 3; Ching Decl. ¶ 4; Def.'s CSF Ex. 2, ECF No. 16-3. To do so, Nationstar caused to be recorded with the BOC a Notice of Mortgagee's Intention to Foreclose Under Power of Sale (“Notice of Intent to Foreclose”), Document Number 2010-159093. Defs.' CSF ¶ 3; Id. Ex. 2. The Notice of Intent to Foreclose stated the address and TMK number of the Property. Def's CSF Ex. 2. Plaintiffs assert that this Notice was defective because it did not contain a description of the Property. Compl. ¶ 28. They further assert that Nationstar erred by offering buyers only a quitclaim deed. Id. ¶ 29.

         The Notice of Intent to Foreclose directed that a public auction of the Property would be held on December 22, 2010. Defs.' CSF at ¶, 43; Id. Ex. 2 at 1. An advertisement regarding the sale was placed in the Honolulu Star-Advertiser once in each of three successive weeks, the last date being more than fourteen days prior to the scheduled auction date. Ching Decl. ¶ 3; Def.'s CSF Ex. 3, ECF No. 16-4 at 3; Compl. ¶ 30. The public auction did not occur on that date, however, and was instead postponed an unknown number of times, by oral announcement at the time and place of the scheduled auction, until it was finally held on March 9, 2011. Defs.' CSF ¶¶ 4, 5; Def.'s CSF Ex. 3 at 3. Plaintiffs contend that Nationstar erred both by not holding the auction on December 22, 2010, and by not publishing new written notice(s) in the newspaper regarding postponements. Compl. ¶¶ 31-37.

         At the March 9, 2011, public auction, the Property was sold for $318, 453.53 to Nationstar or its nominee. Defs.' CSF ¶ 6; Id. Ex. 3 at 3. At the hearing on this Motion, counsel for Defendants stated that this was a credit bid by Nationstar acting as nominee for Fannie Mae. Following the sale, on March 21, 2011, Nationstar recorded with the BOC a Mortgagee's Affidavit of Foreclosure Under Power of Sale (“Mortgagee's Affidavit”), Document Number 2011-046885. Defs.' CSF ¶ 7; Id. Ex. 3; Compl. ¶ 41.

         Around one month later, on April 25, 2011, Nationstar executed a quitclaim deed on the Property to Fannie Mae. Compl. ¶ 19; Bickerton Decl. ¶ 6; Pl.'s CSF Ex. 4, ECF No. 36-6. Nationstar recorded the quitclaim deed with the BOC on June 20, 2011. Pl.'s CSF Ex. 4. Plaintiffs allege that, on October 4, 2011, Fannie Mae executed a limited warranty apartment deed in favor of Barry James and Deborah Lynn Harding (“Hardings”), which Fannie Mae recorded on October 7, 2011. Compl. ¶ 21.


         On March 9, 2017, Plaintiffs filed a Complaint in state court against Defendants, the Hardings, and numerous Doe defendants. Compl., ECF No. 1-1. The Complaint alleges two counts: (1) quiet title, ejectment, and declaratory relief against all defendants, Id. ¶¶ 13-61; and (2) wrongful foreclosure against all defendants, Id. ¶¶ 62-70.

         On November 13, 2017, the Hardings filed a notice of removal with this Court, Notice of Removal, ECF No. 1, and on November 27, 2017, filed an answer and counterclaim against Plaintiffs, ECF No. 4. The counterclaim alleges two counts: (1) quiet title, and (2) declaratory relief. ECF No. 4-1.

         Defendants filed a Motion for Summary Judgment (“MSJ”) on May 18, 2018, ECF No. 15, along with a concise statement of facts, ECF No. 16. Hearing on the MSJ was originally scheduled for August 20, 2018, but on July 30, 2018, the parties stipulated to a continuance, ECF No. 22, and the Court rescheduled the hearing for October 29, 2018, ECF No. 28. On August 8, 2018, the Hardings filed a joinder to the instant motion. ECF No. 25.[4][5] Plaintiffs filed their Opposition (“Opp.”) to the MSJ on October 5, 2018, ECF No. 35, together with a concise statement of facts, ECF No. 36. On October 12, 2018, Defendants filed a Reply to Plaintiffs' Opposition. ECF No. 48. On October 25, 2018, Plaintiffs made a filing pursuant to Local Rule 7.8, [6] consisting of eight cases and a short explanation of the proposition for which each was cited. ECF No. 49. The Court held a hearing on Defendants' MSJ on Monday, October 29, 2018.


         Summary judgment is proper where there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). Federal Rule of Civil Procedure (“Rule”) 56(a) mandates summary judgment “against a party who fails to make a showing sufficient to establish the existence of an element essential to the party's case, and on which that party will bear the burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); see also Broussard v. Univ. of Cal., 192 F.3d 1252, 1258 (9th Cir. 1999).

         “A party seeking summary judgment bears the initial burden of informing the court of the basis for its motion and of identifying those portions of the pleadings and discovery responses that demonstrate the absence of a genuine issue of material fact.” Soremekun v. Thrifty Payless, Inc., 509 F.3d 978, 984 (9th Cir. 2007) (citing Celotex, 477 U.S. at 323); see also Jespersen v. Harrah's Operating Co., 392 F.3d 1076, 1079 (9th Cir. 2004). “When the moving party has carried its burden under Rule 56[(a)] its opponent must do more than simply show that there is some metaphysical doubt as to the material facts [and] come forward with specific facts showing that there is a genuine issue for trial.” Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 586-87 (1986) (citation and internal quotation marks omitted); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986) (stating that a party cannot “rest upon the mere allegations or denials of his pleading” in opposing summary judgment).

         “An issue is ‘genuine' only if there is a sufficient evidentiary basis on which a reasonable fact finder could find for the nonmoving party, and a dispute is ‘material' only if it could affect the outcome of the suit under the governing law.” In re Barboza, 545 F.3d 702, 707 (9th Cir. 2008) (citing Anderson, 477 U.S. at 248). When considering the evidence on a motion for summary judgment, the court must draw all reasonable inferences on behalf of the nonmoving party. Matsushita Elec. Indus. Co., 475 U.S. at 587; see also Posey v. Lake Pend Oreille Sch. Dist. No. 84, 546 F.3d 1121, 1126 (9th Cir. 2008) (stating that “the evidence of [the nonmovant] is to be believed, and all justifiable inferences are to be drawn in his favor” (internal citation and quotation omitted)).


         Defendants assert their entitlement to summary judgment on a number of grounds. They argue that: Plaintiffs' claim for declaratory relief is duplicative of the relief sought in their other claims, MSJ at 22; Plaintiffs' claims are time-barred and/or subject to laches, MSJ at 6-20; Plaintiff cannot assert a wrongful foreclosure claim, or indeed any claim, against Fannie Mae, MSJ at 22-23; and that Plaintiffs' quiet title and ejectment claims fail as against both Defendants, MSJ at 20-21. The Court addresses these arguments below.

         I. Declaratory Relief

         Plaintiffs seek, among other things, “a declaratory judgment against all Defendants that Nationstar's and Fannie Mae's non-judicial foreclosure sale and transfer of the Property . . . is void or at the least voidable at Plaintiffs' election[.]” Compl., Prayer for Relief ¶ 7; see also Compl. ¶ 57 (“Plaintiffs are entitled to a judicial declaration that said Defendants have no such rights and the possession of and title to the Property should be restored to Plaintiffs.”). Defendants assert that Plaintiffs' request for declaratory relief fails as a matter of law because it is “duplicative” of Plaintiffs' other claims. MSJ at 22. The Court concurs and finds summary judgment appropriate on this claim.

         First, it is important to note that declaratory judgment allows rights and obligations to be “adjudicated in cases brought by any interested party involving an actual controversy that has not reached a stage at which either party may seek a coercive remedy and in cases where a party who could sue for coercive relief has not yet done so.” Seattle Audubon Soc. v. Moseley, 80 F.3d 1401, 1405 (9th Cir. 1996) (citing 28 U.S.C. § 2201); Wavecom Sols. Corp. v. Verizon Hawaii Int'l Inc., No. CV. 11-00337 DAE-KSC, 2011 WL 5374428, at *7-8 (D. Haw. Nov. 7, 2011) (quoting Seattle Audubon Soc.). Because a declaratory judgment is not a corrective action, it should not be used to remedy past wrongs. See, e.g., Marzan v. Bank of Am., 779 F.Supp.2d 1140, 1146 (D. Haw. 2011) (“[B]ecause Plaintiffs' claims are based on allegations regarding Defendants' past wrongs, a claim under the Declaratory Relief Act is improper and in essence duplicates Plaintiffs' other causes of action.” (citations omitted)) (abrogated on other grounds by Compton v. Countrywide Fin. Corp., 761 F.3d 1046 (9th Cir. 2014)). Rather, the “useful purpose served by the declaratory judgment action is the clarification of legal duties for the future[.]” Amsouth Bank v. Dale, 386 F.3d 763, 786 (6th Cir. 2004) (internal quotation marks omitted); see also Societe de Conditionnement en Aluminium v. Hunter Eng'g Co., 655 F.2d 938, 943 (9th Cir. 1981) (“[The Declaratory Judgment Act] brings to the present a litigable controversy, which otherwise might only by [sic] tried in the future.”).

         Moreover, courts frequently dismiss claims for declaratory relief where the relief sought is duplicative of their other claims. See, e.g., Cannon v. U.S. Bank, NA, No. CIV. 11-00079 HG-BMK, 2011 WL 2117015, at *3 (D. Haw. May 24, 2011) (“The Plaintiffs have requested declaratory relief to correct an allegedly improper mortgage transaction. The Declaratory Relief Act, however, is not an appropriate remedy here since any declaration of the rights of the parties would essentially duplicate Plaintiffs' other causes of action.”); Swartz v. KPMG LLP, 476 F.3d 756, 766 (9th Cir. 2007) (affirming district court's dismissal of plaintiff's request for declaratory judgment and reasoning, “To the extent [plaintiff] seeks a declaration of defendants' liability for damages sought for his other causes of action, the claim is merely duplicative and was properly dismissed.”).

         Here, Plaintiffs' claim for declaratory relief, as pleaded, is based upon Defendants' past wrongs. See generally Compl. In addition, Plaintiffs' claim for declaratory relief is commensurate with the relief sought through their other claims; in particular, Plaintiffs' request for a declaration “that Nationstar's and Fannie Mae's non-judicial foreclosure sale and transfer of the Property . . . is void or at the least voidable at Plaintiffs' election, ” Compl., Prayer for Relief at ¶ 7, mirrors the relief sought through Plaintiffs' wrongful foreclosure and quiet title claims. The same is true of Plaintiffs' requested declaration that Defendants or the Hardings hold no “right, title, or interest in the Property” and “possession of and title to the Property should be restored to Plaintiffs.” Compl. ¶ 57.

         Under these circumstances, declaratory relief will “neither serve a useful purpose in clarifying and settling the legal relations in issue nor terminate the proceedings and afford relief from the uncertainty and controversy faced by the parties.” United States v Washington, 759 F.2d 1353, 1357 (9th Cir. 1985) (citations omitted). Accordingly, Defendants are entitled to summary judgment on Plaintiffs' claim for declaratory relief.

         II. Wrongful Foreclosure

         a. Statute of Limitations

         Defendants argue that all of Plaintiffs' claims against them are time-barred. MSJ at 6. According to Defendants, all of Plaintiffs' claims accrued no later than the originally published auction date-December 22, 2010-and are thus time-barred by either the two-year time limitation under HRS § 657-7 or the six-year time limitation under HRS § 657-1. E.g., Id. at 6, 9, 13. The Court addresses this argument as it applies to Plaintiffs' wrongful foreclosure claims.

         i. Accrual of Plaintiffs' Claims

         To determine whether Plaintiffs' claims are time-barred by the applicable statutes of limitations, the Court must first determine when Plaintiffs' claims accrued. The Hawai`i Supreme Court does not appear to have yet decided when a wrongful foreclosure claim stemming from a non-judicial foreclosure accrues, and the parties advocate for different accrual dates. Compare MSJ at 6 with Opp. at 4.

         The term “accrue” means “[t]o come into existence as an enforceable claim or right.” Black's Law Dictionary (10th ed. 2014). Relevant here, a claim normally accrues under HRS § 657-1 “when the contract is breached.” Au v. Au, 63 Haw. 210, 219, 626 P.2d 173, 180 (1981); see also Blair v. Ing, 95 Haw. 247, 264, 21 P.3d 452, 469 (2001) (explaining that, under traditional “occurrence rule, ” “the accrual of the statute of limitations begins when the negligent act occurs or the contract is breached.”); Schimmelfennig v. Grove Farm Co., 41 Haw. 124, 130 (1955) (“A right of action accrues whenever such a breach of duty or contract has occurred . . . as will give a right to then bring and sustain a suit. . . . If an act occurs . . . for which the law gives a remedy, that starts the statute.”) (citations and internal quotation marks omitted). And a claim accrues under HRS § 657-7 “the moment plaintiff discovers or should have discovered the negligent act, the damage, and the causal connection between the former and the latter.” Yamaguchi v. Queen's Med. Ctr., 65 Haw. 84, 90, 648 P.2d 689, 693-94 (1982).

         In this matter, Defendants contend that Plaintiffs' claims accrued no later than December 22, 2010. MSJ at 6-9. “The alleged breach, ” Defendants argue, “occurred [at the latest] when the public auction was not held on December 22, 2010, the date of the originally scheduled sale specified in the [Notice of Intent to Foreclose].” MSJ at 9 (emphasis in original). The Court finds, however, that ...

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