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Greenspon v. Deutsche Bank National Trust Co.

United States District Court, D. Hawaii

January 7, 2020



          Jill A. Otake United States District Judge

         Plaintiff Michael C. Greenspon (“Plaintiff”) brought claims against various defendants in Hawai‘i state court. Defendants removed the action to federal court. ECF Nos. 1, 6, 12, 13. Plaintiff now asks the Court to remand the action. ECF No. 24. The Court deems this matter appropriate for decision without oral argument. See Fed. R. Civ. P. 78; Local Rule 7.1(c). For the reasons stated below, Plaintiff's motion to remand is GRANTED.

         I. BACKGROUND

         On September 25, 2019, Plaintiff filed a First Amended Complaint (“FAC”) in Hawai‘i state court against Defendants Deutsche Bank National Trust Company (“Deutsche Bank”); Ocwen Loan Servicing, LLC (“Ocwen”);[1] James Blaine Rogers III; J. Blaine Rogers III, ALC; Alan Jarren Ma; and Dentons U.S. LLP.[2] See ECF No. 24-3 On September 26, 2019 Defendants Deutsche Bank and Ocwen (collectively, “Deutsche Bank Defendants”) removed the action to federal court because one of Plaintiff's claims allegedly raises a federal question. See ECF No. 1.[3]

         The present dispute stems from a construction loan Plaintiff obtained in 2003 from IndyMac Bank, FSB that was secured by a mortgage on property on Maui. See FAC ¶ 24. A few years later, in 2008, federal regulators seized IndyMac and OneWest (“CIT”) acquired some of its assets while the FDIC placed other assets in receivership. See Id. ¶¶ 30-32. Plaintiff alleges that CIT, acting as Deutsche Bank's servicer and agent, conducted an unlawful nonjudicial foreclosure and public auction of the Maui property in 2010. See Id. ¶ 33. A series of lawsuits in Hawai‘i state court followed. See Id. ¶¶ 34-41.

         In what Plaintiff calls the “Main Action, ” he sued IndyMac and, in September 2011, the FDIC agreed to disclaim any rights or interests in the Maui property in exchange for dismissal of all claims against it and IndyMac. See Id. ¶¶ 42-45.

         In another action, and through a counterclaim in the Main Action, Deutsche Bank sought to eject Plaintiff from the Maui property based on the 2010 nonjudicial foreclosure sale. See Id. ¶¶ 34, 46. Plaintiff alleges that, in seeking this relief, Deutsche Bank made certain misrepresentations about the nonjudicial foreclosure-e.g., who owned the promissory note and who was the highest bidder at auction-in order to obtain possession of the Maui property. See Id. ¶¶ 47-49. Although Deutsche Bank obtained summary judgment for possession of the property in the Main Action in 2013, the Intermediate Court of Appeals (“ICA”) vacated that judgment and remanded the case to the trial court in 2016.[4] See Id. ¶¶ 35-37.

         On remand, Deutsche Bank amended its counterclaim in the Main Action in May 2018 regarding its right to foreclose and/or enforce a lien on the Maui property. See Id. ¶¶ 50-51. In connection with this, Deutsche Bank (through its agents and attorneys) recorded a Notice of Pendency of Action in the Bureau of Conveyances in May 2018 representing that Deutsche Bank is the holder of the note, although Plaintiff alleges Deutsche Bank had previously represented to the contrary. See Id. ¶¶ 48, 50-51. Deutsche Bank (through its agents and attorneys) also later recorded an assignment and transfer of lien in the Hawai‘i Bureau of Conveyances in July 2018 that purports to transfer the note and mortgage from FDIC to Deutsche Bank, effective June 2006. See Id. ¶¶ 52-54. But Plaintiff alleges two problems with this recording: (1) the FDIC had no rights to transfer to Deutsche Bank because of the FDIC's disclaimer of rights or interest in the Maui property in September 2011; and (2) the FDIC had nothing to transfer to Deutsche Bank in 2006 because the FDIC receivership of IndyMac did not occur until 2008. See Id. ¶¶ 81-83.

         Plaintiff thus alleges these documents are a sham and Defendants' promotion of them to obtain relief in state court constitutes fraud. See Id. ¶¶ 84- 88. Plaintiff further alleges that recording these documents constitutes tampering with a government record in violation of Hawai‘i Revised Statutes (“HRS”) § 710-1017, unlawful recording of a nonconsensual lien in violation of HRS § 507D, and violations of the Hawai‘i Rules of Professional Conduct for the attorneys involved. See Id. ¶¶ 91-92, 100-06, 114.

         Under his first claim for fraud and intentional misrepresentation, Plaintiff also alleges Deutsche Bank and Ocwen overstated any amount due on the loan based on inflated force-placed hazard insurance charges and fees connected to the prior unlawful nonjudicial foreclosure. See Id. ¶¶ 64-71, 107-12. He also takes issue with Ocwen's failure to provide requested information regarding when servicing transferred to Ocwen and the amount due. See Id. ¶¶ 56-63.

         Plaintiff's third cause of action-which Defendants contend justified removal-alleges unfair and deceptive acts and practices in violation of HRS § 480-2. To support this claim, Plaintiff references the fraudulent conduct and wrongful foreclosure discussed above, as well as Defendants' conduct that he alleges violates the federal Fair Debt Collection Practices Act (“FDCPA”) along with other Hawai‘i laws, the Hawai‘i Rules of Professional Conduct, Hawai‘i Court Records Rules regarding protection of personal information, and conduct allegedly evidencing a pattern of malicious tactics in litigation and to collect a debt. See Id. ¶¶ 144-77.

         Count III also incorporates the remaining allegations of the FAC, which allege claims for wrongful foreclosure (Count II), see Id. ¶¶ 136-43, violations of the Hawai‘i Collection Practices Act, HRS § 480D (Count IV), see Id. ¶¶ 178-192; unfair and deceptive acts and practices in violation of HRS § 480 (Count V), see Id. ¶¶ 193-203; conversion, slander of title, and quantum meruit (Count VI), see Id. ¶¶ 204-13, gross negligence (Count VII), ¶¶ 214-22; breach of fiduciary duty (Count VIII), see Id. ¶¶ 223-32; tortious interference (Count IX), see Id. ¶¶ 233- 48; and intentional infliction of emotional distress (Count X), see Id. ¶¶ 249-66. In support of these claims, Plaintiff seeks damages and punitive damages and asks the Court to quiet title, create a constructive trust, and grant injunctive relief. See Id. ¶¶ 267-94.

         After Defendants removed, Plaintiff moved to remand the action to state court on the basis that there is no federal question jurisdiction. See ECF No. 24. Deutsche Bank Defendants opposed the motion, ECF No. 38, which Defendant Alan Ma joined, ECF No. 41. Dentons Defendants filed their own opposition to the motion. ECF No. 40.

         II. ...

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