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Hochroth v. Ally Bank

United States District Court, D. Hawaii

March 27, 2019

ALLY BANK, a Utah for profit corporation; CENLAR FSB, a federally charted bank; DOES 1-10, Defendants.




         This case concerns the administration of Plaintiff John Hochroth's home loan and mortgage by Defendants Ally Bank and Cenlar FSB (“Cenlar”). Plaintiff asserts causes of action under the Fair Debt Collection Practices Act (“FDCPA”) and state common law, seeking damages for Defendants' alleged mishandling of Plaintiff's default. Defendants move to dismiss the Complaint primarily under the Rooker-Feldman doctrine and on preclusion grounds, based on a prior foreclosure judgment in state court. Defendants ask the Court, in the alternative, to stay the federal claims pending resolution of Plaintiff's appeal of the state foreclosure judgment. For the reasons discussed below, the Court DENIES Defendants' motion.


         Plaintiff owns a house in Kaneohe, Hawai‘i, with a home loan and mortgage from Ally Bank. Doc. No. 1 at 3. Cenlar is the authorized servicer of the mortgage and loan. Id. at 4. Plaintiff became delinquent on his mortgage payments and Ally Bank filed to foreclose on the mortgage in state court in February 2016. Doc. No. 8-2 at 1; Doc. No. 8-3 at 5. The state court granted a decree of foreclosure (the “Foreclosure Decree”) and entered judgment on October 16, 2017. Doc. No. 8-3 at 8, 12. Plaintiff's appeal of the Foreclosure Decree is currently pending. Doc. No. 11 at 18; Doc. No. 11-6.

         In the course of the foreclosure proceeding, Plaintiff attempted to ascertain from Ally Bank the amount he would need to pay to reinstate his loan. Doc. No. 1 at 5-6. Ally Bank responded that Plaintiff's right to reinstatement had passed. Id. at 6; Doc. No. 8-6 at 55. However, despite Ally Bank's representations that Plaintiff's right to reinstatement had expired, Cenlar continued to offer Plaintiff the opportunity to reinstate his mortgage loan. Doc. No. 1 at 6-7. In December of 2017, after the foreclosure decree had already issued, Cenlar sent Plaintiff a statement that he owed $111, 179.75 on his loan, and that this was “the amount [due] to reinstate” the loan. Doc. No. 8-6 at 48.

         On February 9, 2018, Ally Bank filed a motion for attorneys' fees and costs for the legal work performed on the Foreclosure Decree (the “Attorneys' Fees Motion”). Doc. No. 11-7. Plaintiff opposed the Attorneys' Fees Motion, primarily arguing that the requested attorneys' fees were excessive and improperly billed. Doc. No. 8-6. Plaintiff also contended that because Ally Bank had refused to inform him of his reinstatement amounts, Ally Bank should not be awarded attorneys' fees for time spent litigating the foreclosure case after that refusal. Id.

         While the Attorneys' Fees Motion was pending, Cenlar and Plaintiff reached an agreement on reinstatement. Doc. No. 1 at 7. On February 26, 2018, Cenlar sent an acknowledgment letter to Plaintiff, stating that his reinstatement payment was received, and that “any foreclosure action will be closed.” Doc. No. 1 at 7; Doc. No. 11 at 8. The reinstatement agreement required Plaintiff to pay certain costs and attorneys' fees related to the foreclosure action. Doc. No. 1 at 7. Plaintiff's subsequent loan statements from Cenlar increased to reflect his agreement to pay these attorneys' fees and costs. Id.

         The state court granted Ally Bank's Attorneys' Fees Motion on May 4, 2018 (the “Attorneys' Fees Order”). Doc. No. 8-7. The Attorneys' Fees Order did not address Plaintiff's argument that attorneys' fees accumulated after Ally Bank refused to provide Plaintiff the reinstatement amount should not be awarded. Id. After the issuance of the Attorneys' Fees Order, Plaintiff sent a letter to the state court informing the court that Plaintiff had fully reinstated his loan and arguing that it was improper for Ally Bank to continue to seek foreclosure or attorneys' fees. Doc. No. 8-9. The state court held a hearing to address Plaintiff's letter, during which Plaintiff's counsel stated that if Ally Bank did not agree to set aside the Attorneys' Fees Order, Plaintiff would file a motion to set it aside based on the reinstatement agreement with Cenlar. Doc. No. 8-10 at 11:7-13. The court did not enter any rulings during the hearing, and instead scheduled another status conference to give the parties time to discuss the issues with their clients and with each other. Id. The record does not reflect any further information about the status conference. Thereafter, Plaintiff filed a motion to set aside and vacate the Foreclosure Decree and Attorneys' Fees Order, but Plaintiff voluntarily withdrew that motion before the state court addressed it. See Doc. No. 8 at 16.

         On August 16, 2018, Plaintiff filed the present Complaint, asserting causes of action under the FDCPA and state common law against Defendants. The FDCPA claims relate to Defendants' communications with Plaintiff regarding his debt: Count 1 alleges calls before 8:00 a.m. and after 9:00 p.m.; Count 2 alleges calls made directly to Plaintiff even though Cenlar was aware Plaintiff had counsel; Count 3 alleges communications with Plaintiff after he requested they stop; Count 4 alleges harassing communications; Count 5 alleges communications with intent to annoy or harass; Count 6 alleges calls without identifying the caller; Count 7 alleges false and deceptive communications regarding loan reinstatement; Count 8 alleges threats of imminent eviction; Count 9 alleges a failure to advise Plaintiff that the communications were from debt collectors; Count 10 alleges that Cenlar Bank communicated in a way that gave the false appearance of legal process; and Count 11 alleges various violations related to door tags left on Plaintiff's door. Doc. No. 1 at 9-22. Counts 12 through 14, the state law claims, seek damages for Ally Bank's and Cenlar's contradictory statements and actions regarding Plaintiff's ability to reinstate his loan. Doc. No. 1 at 23-27. Specifically, Count 12 asserts a breach of contract claim; Count 13 asserts a promissory estoppel claim; and Count 14 asserts a Hawai‘i statutory violation of unfair and deceptive practices for the alleged contradictory positions of Cenlar and Ally Bank. Id.

         Defendants' motion to dismiss asserts several grounds for dismissal and abstention. Defendants move for dismissal for lack of subject matter jurisdiction under Federal Rule of Civil Procedure (“FRCP”) 12(b)(1), pursuant to the Rooker-Feldman doctrine, and under FRCP 12(b)(6) on claim preclusion grounds. See Doc. No. 8 at 19 n.15, 26 n.16. Defendants also seek a stay of the federal claims pursuant to the Younger abstention doctrine and the Court's inherent authority to issue a stay. Doc. No. 8 at 2.


         FRCP 12(b)(6) authorizes dismissal of a complaint that fails “to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). “On a motion to dismiss, the court accepts the facts alleged in the complaint as true.” UMG Recordings, Inc. v. Shelter Capital Partners LLC, 718 F.3d 1006, 1014 (9th Cir. 2013) (quoting Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1988)). Conclusory allegations of law, unwarranted deductions of fact, and unreasonable inferences are insufficient to defeat a motion to dismiss. Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001); Nat'l Ass'n for the Advancement of Psychoanalysis v. Cal. Bd. of Psychology, 228 F.3d 1043, 1049 (9th Cir. 2000). Although affirmative defenses generally do not suffice for a motion to dismiss, preclusion may be the basis for dismissal under FRCP 12(b)(6) where there are no disputed issues of fact. See Scott v. Kuhlmann, 746 F.2d 1377, 1378 (9th Cir. 1984).

         The Rooker-Feldman doctrine addresses jurisdiction and is thus analyzed under the FRCP 12(b)(1) standard. Noel v. Hall, 341 F.3d 1148, 1154 (9th Cir. 2003). Because federal courts have limited subject-matter jurisdiction, the plaintiff bears the burden of establishing jurisdiction. Scott v. Breeland, 792 F.2d 925, 927 (9th Cir. 1986). Dismissal is warranted when the plaintiff fails to meet its burden. Chandler v. State Farm Mut. Auto. Ins. Co., 598 F.3d 1115, 1122 (9th Cir. 2010). The Court may rely on evidence submitted outside of the complaint to resolve factual disputes concerning the existence of jurisdiction. McCarthy v. United States, 850 F.2d 558, 560 (9th Cir. 1988).


         A. The Rooker-Feldman Doctrine Does Not Bar ...

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