United States District Court, D. Hawaii
SANFORD A. MOHR AND TINA A. MOHR, Plaintiffs,
DEUTSCHE BANK NATIONAL TRUST COMPANY AS TRUSTEE, ET AL., Defendants.
ORDER GRANTING DEFENDANT BNC'S MOTION FOR SUMMARY
JUDGMENT AND GRANTING IN PART AND DENYING IN PART DEFENDANT
MLB'S SUBSTANTIVE JOINDER
C. KAY, SR. UNITED STATES DISTRICT JUDGE
reasons set forth below, the Court GRANTS Defendant BNC
Mortgage, Inc.'s Motion for Summary Judgment, ECF No. 51,
and GRANTS IN PART and DENIES IN PART Intervenor-Defendant
MLB SUB I, LLC's Substantive Joinder to Defendant BNC
Mortgage, Inc.'s Motion for Summary Judgment, ECF No. 53,
1. To the extent that it seeks the same relief as that sought
by BNC in BNC's Motion for Summary Judgment, the
Substantive Joinder is GRANTED.
2. To the extent that it seeks additional relief beyond the
relief sought by BNC in BNC's Motion for Summary
Judgment, the Substantive Joinder is DENIED.
The 2004 Mortgage Transaction and Default
dispute arises from a transaction that took place in 2004
when, to refinance their home mortgage, Sanford and Tina Mohr
(“Plaintiffs”) executed a promissory note with
subprime lender and named Defendant Finance America, LLC
(“Finance America”). BNC's Concise Statement
of Facts (“CSF”) ¶ 2, ECF No. 52; Pls.'
CSF ¶ 1, ECF No. 87. The note was secured by a mortgage
(the “Mortgage”) executed in favor of Mortgage
Electronic Registration Systems, Inc. (“MERS”) as
sole nominee for Finance America, and serviced by Defendant
HomEq Servicing Corporation (“HomEq”).
See BNC's CSF Ex. 2, ECF No. 52-3. The parties
executed the loan documents memorializing the transaction on
April 16, 2004. Id.; see also Pls.' CSF
months later, Plaintiffs stopped making payments on their
Mortgage. BNC's CSF ¶ 3. In response, Finance
America and MERS advised Plaintiffs in March 2005 that they
intended to begin non-judicial foreclosure proceedings.
Id. Plaintiffs in turn sent letters to Finance
America, Defendant Deutsche Bank National Trust Company as
Trustee (“Deutsche Bank”), and HomEq purporting
to rescind the Mortgage based on alleged violations of the
Truth In Lending Act (“TILA”). See id.;
Pls.' CSF ¶ 3.
The State-Court Action
April 19, 2005, Plaintiffs filed a complaint, ECF No. 38-4,
in Hawai`i state court against, inter alia, Finance
America, HomeEq, MERS, and Deutsche Bank seeking declaratory
and monetary relief based on these alleged violations. In
response, Finance America and MERS cancelled the planned
non-judicial foreclosure sale. BNC's CSF ¶ 4.
Plaintiffs filed their First Amended Complaint, ECF No. 38-14
(“FAC”), on January 31, 2006. In it, Plaintiffs
allege, in relevant part, that they are entitled to (1)
rescission of the Mortgage under TILA; (2) damages under
TILA; and (3) damages under Hawai`i's unfair or deceptive
acts or practices (“UDAP”) law. See FAC,
Counts I-III. The First Amended Complaint also asserts a
cause of action to quiet title based on Defendants'
apparent intention to initiate foreclosure proceedings.
Id. Count V.
and Defendant BNC Mortgage, Inc. (“BNC”)
negotiated a settlement in 2008, though the parties disagree
on the precise timeline and outcome. See BNC's
CSF ¶ 6; Pls.' CSF ¶ 5. Under the agreement,
Plaintiffs were to tender the proceeds of the loan less
certain bank charges and interest, and BNC would release the
Mortgage. BNC's CSF ¶ 6. The parties agree and the
record shows that BNC executed and recorded a document
releasing the Mortgage on December 10, 2008. Id. Ex.
4-I, ECF No. 52-5; see also Pls.' CSF ¶ 6.
The record also shows that BNC then recorded a document
rescinding and cancelling the release, BNC's CSF Ex. 6-1,
ECF No. 52-7, which it apparently did when Plaintiffs failed
to pay the agreed-upon amount to satisfy the judgment.
See BNC's Mot. Summ. J. (“MSJ”) at
3, ECF No. 51-1.
Subsequent Reassignments of the Mortgage
BNC became the owner of the Mortgage in 2005 when it merged
with Finance America. MSJ at 2 n.3; see also ECF No.
38-30. On July 25, 2013, MERS, as nominee for Finance
America-which had since merged with BNC-assigned the Mortgage
to BNC's parent company, Lehman Brothers. Opp. Ex. A-3,
ECF No. 86-1. Thereafter, on April 22, 2014, Lehman Brothers
assigned the Mortgage to MLB. Id. Ex. A-4; BNC's
CSF Ex. 3, ECF No. 52-4. MLB asserts that it is now the
current owner of the Mortgage. MLB's CSF at 2, ECF No.
The Bankruptcy Proceedings
filed for bankruptcy in 2009, and the case was consolidated
with that of its parent company, Lehman Brothers Holdings,
Inc. (“Lehman Brothers”), which had filed for
bankruptcy shortly beforehand. BNC's CSF ¶¶ 7-8.
In light of the bankruptcy proceedings, the state-court
action was stayed. MSJ at 3.
the stay was in place, Plaintiffs filed a proof of claim, ECF
No. 52-5 (“POC”), in the bankruptcy proceedings
appearing to seek the same relief sought in the state-court
action: rescission and damages under TILA and UDAP. The proof
of claim attached a copy of the First Amended Complaint as
the basis for the claim. See POC Ex. A. In response,
the plan administrator, for Lehman Brothers objected to
Plaintiffs' proof of claim “on BNC's
behalf.” BNC's CSF Ex. 5, ECF No. 52-6.
supplemental objection, ECF No. 52-7 (“Suppl.
Obj.”), the plan administrator argued that
Plaintiffs' claims were invalid on several additional
grounds: (1) BNC no longer possessed any interest in the
loan, so it could not rescind the Mortgage; (2) Plaintiffs
were not entitled to rescission because they failed to plead
that they could tender the loan amount; (3) the claims for
TILA damages were barred by the one-year statute of
limitations; and (4) any state-law claims rested on the same
facts as the alleged TILA violations and were thus preempted.
On April 23, 2015, following a hearing attended by
Plaintiffs, the bankruptcy court issued an order, ECF No.
52-8, granting the objection and disallowing and expunging
Plaintiffs' claim in its entirety, with prejudice (the
case came before the Court after MLB moved to intervene in
the state-court action, which the state court allowed on
August 5, 2016. ECF No. 39-18. MLB then removed the case on
September 6, 2016, ECF No. 1, asserting federal question and
March 8, 2018, after the bankruptcy stay was lifted, BNC
filed the instant Motion for Summary Judgment, ECF No. 51,
along with a concise statement of facts, ECF No. 52. MLB then
filed a Substantive Joinder to BNC's Motion
(“Joinder”), as well as its own CSF. ECF Nos. 53
& 54. On March 22, 2018, at Plaintiffs' request,
Magistrate Judge Puglisi entered an order to stay the case
until December 31, 2018, ECF No. 63, and the Court
administratively withdrew BNC's Motion and MLB's
Joinder, ECF No. 64. After the stay was lifted, the Court
reinstated the motions. ECF No. 71. Plaintiffs then sought
yet another continuance of the hearing on BNC's Motion,
which this Court granted. ECF Nos. 82 & 84.
filed opposition briefing (“Opposition”) in
response to the Motion and the Joinder on May 20, 2019, ECF
Nos. 86 & 88, and BNC filed its reply on May 24, 2019,
ECF No. 90. The Court held a hearing ...