dinsfla | FORECLOSURE FRAUD | by DinSFLA - Part 2

Author Archives | dinsfla

Madden v. Midland Funding, LLC, No. 11-CV-8149, (S.D.N.Y.) | A federal judge has ruled that New York law—not Delaware law as the parties agreed in the initial loan agreement—applies to the defaulted borrower’s claims and has certified a class action against the debt collector.

Madden v. Midland Funding, LLC, No. 11-CV-8149, (S.D.N.Y.) | A federal judge has ruled that New York law—not Delaware law as the parties agreed in the initial loan agreement—applies to the defaulted borrower’s claims and has certified a class action against the debt collector.

h/t Dubin Law Offices

If ya’ll recall I posted this before about this debt collector: 

Is Asset Acceptance LLC forging purchase & assignment agreements? CFPB, FTC Check out VP Deborah Everly signatures!

Lexology-

A federal judge has ruled that New York law—not Delaware law as the parties agreed in the initial loan agreement—applies to the defaulted borrower’s claims and has certified a class action against the debt collector.

On February 27, U.S. District Judge Cathy Seibel issued a long-awaited decision in Madden v Midland Funding, LLC. The District Court’s order considered the following questions: (1) which state’s law should apply to the defaulted borrower’s claims, and (2) whether to certify a class action against the debt collector on behalf of similarly situated borrowers.

After a brief history of the case, we summarize both holdings and discuss their implications for marketplace lending. In short, Judge Seibel’s decision compounds uncertainty surrounding debt collection practices and could have far-reaching implications for related industries, including marketplace lending.

[LEXOLOGY]

 

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
————————————————————————X
SALIHA MADDEN, on behalf of herself and all others
similarly situated,

Plaintiffs,

-against-

MIDLAND FUNDING, LLC and MIDLAND CREDIT
MANAGEMENT, INC.,
Defendants.
————————————————————— ——— X

Down Load PDF of This Case

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



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TFH 3/12 | Special Robo-Signer Exclusive Expose

TFH 3/12 | Special Robo-Signer Exclusive Expose

COMING TO YOU LIVE DIRECTLY FROM THE DUBIN LAW OFFICES AT HARBOR COURT, DOWNTOWN HONOLULU, HAWAII

LISTEN TO KHVH-AM (830 ON THE AM RADIO DIAL)

ALSO AVAILABLE ON KHVH-AM ON THE iHEART APP ON THE INTERNET

.

.

Sunday –  March 12

Special Robo-Signer Exclusive Expose

———————

This Sunday’s live broadcast first aired on The Foreclosure Hour when the nationwide fraudulent signing of mortgage assignments/notarizations and note allonges was first exposed due to the superior lawyering of several Florida attorneys.

Nevertheless, although at first drawing the attention of some astute judges, such as the late Judge Arthur Schack in New York, judicial attention to such outright forgeries and the falsely recorded and the falsely sworn and falsely notarized documents in court rapidly decreased as judges are said to have erroneously concluded that the infamous AG Settlement years ago had somehow compensated borrowers for such false loan documentation, which it obviously however did not.

It is once again therefore time to remind everyone, especially the judiciary, lest we forget, of the incredibly blatant fraud perpetrated through robo-signing not only upon America’s mortgage borrowers, but also upon our Courts, which has been instrumental in covering up what we termed on last week’s show “The Great Deception”.

And there is no better way of doing so than revisiting the startling video-taped admissions, exclusively broadcast by The Foreclosure Hour despite constant threats of lawsuits, of some of America’s most prolific robos, as I like to call them, employed by one of America’s leading past false document manufacturers.

You may also view these exclusive videos on our website at www.foreclosurehour.com.

Starting this Sunday, listeners on the Mainland are reminded that The Foreclosure Hour begins one hour later Pacific and Eastern time as most of the Mainland, unlike Hawaii, switches to Daylight Savings Time.

~

.
Host: Gary Dubin Co-Host: John Waihee

.

CALL IN AT (808) 521-8383 OR TOLL FREE (888) 565-8383

Have your questions answered on the air.

Submit questions to info@foreclosurehour.com

The Foreclosure Hour is a public service of the Dubin Law Offices

Past Broadcasts

EVERY SUNDAY
3:00 PM HAWAII
6:00 PM PACIFIC
9:00 PM EASTERN
ON KHVH-AM
(830 ON THE DIAL)
AND ON
iHEART RADIO

The Foreclosure Hour 12

 

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



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Wall St. is misreading Trump, and a market bloodbath is imminent

Wall St. is misreading Trump, and a market bloodbath is imminent

CNBC-

Former top federal budget official David Stockman has a stark warning for investors: There’s going to be a disaster in Washington and you’re not going to see it coming.

Stockman, an ardent critic of President Donald Trump, has strong doubts that the rosy view investors are taking on the economy can hold water in the near-term. As usual, he didn’t mince words when explaining his perspective to CNBC.

Last week, the Dow Jones Industrial Average and S&P 500 Index jumped following Trump’s speech to Congress, with markets growing more bullish about the Trump policy agenda. Yet since Wednesday, both indexes have failed to continue the trend of new highs.

[CNBC]

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Cleveland v. CROWN FINANCIAL, LLC | FL 1DCA – the court erred by granting a new trial based on newly discovered evidence upon finding that the evidence could not have been discovered by the exercise of due diligence

Cleveland v. CROWN FINANCIAL, LLC | FL 1DCA – the court erred by granting a new trial based on newly discovered evidence upon finding that the evidence could not have been discovered by the exercise of due diligence

 

SCOTT CLEVELAND AND STEPHANIE CLEVELAND, Appellants,
v.
CROWN FINANCIAL, LLC, Appellee.

Case No. 1D16-3981.
District Court of Appeal of Florida, First District.
Opinion filed March 1, 2017.
An appeal from the Circuit Court for Walton County, David W. Green, Judge.

Jeffrey U. Beaverstock and Daniel L. Burkard of Burr & Forman, LLP, Mobile, AL, for Appellants.

Robert J. Powell of Clark Partington, Pensacola, for Appellee.

LEWIS, J.

Appellants, Scott and Stephanie Cleveland, appeal the trial court’s Order Granting New Trial and Relief from Judgment, arguing that the court erred by granting a new trial based on newly discovered evidence upon finding that the evidence could not have been discovered by the exercise of due diligence. For the following reasons, we agree with Appellants and, therefore, reverse the trial court’s order.

Background

In June 2013, Appellee, Crown Financial, LLC, filed against Appellants a Mortgage Foreclosure Complaint, alleging that the parties executed in March 2010 a Mortgage and a Profit Sharing Agreement that conveyed to Appellee the subject property, Appellants were in default, and Appellee was entitled to foreclosure on the property and to $418,972.22 in principal pursuant to those documents. At the non-jury trial, Chad Tribe, a member and manager of Appellee, testified in part that his responsibilities included reviewing the records relating to the Profit Sharing Agreement and Mortgage to determine the amounts owed and that he had reviewed the records the day before trial. Tribe testified that while the Profit Sharing Agreement limited the outstanding advances to $300,000, Appellee increased the loan advance to $500,000. When asked if the Profit Sharing Agreement was amended to reflect the increased advance, Tribe responded, “I do not recall. I did not see a document in file, though, that stated that,” and he testified that there was no document before the trial court that memorialized the increase in advances.

The parties disputed the amount of the loans that was secured. Appellee contended that the future advances clause of the Mortgage secured anything over $300,000 up to $600,000, while Appellants argued that the Profit Sharing Agreement secured advances only up to $300,000 and “if anything, the language in the mortgage itself is conflicting,” with the former controlling. In its Final Judgment, the trial court determined that Appellee was entitled to $419,069.64 in principal, thereby implicitly agreeing with Appellee on the issue. On appeal, we reversed and remanded for the recalculation of Appellants’ indebtedness upon concluding that the Profit Sharing Agreement was controlling and limited the secured advances to $300,000, and we noted that “the Agreement, which provided that the Mortgage at issue would secure Appellants’ obligations, was not amended to reflect a $500,000 maximum advance amount.” See Cleveland v. Crown Fin., LLC, 183 So. 3d 1206, 1210 (Fla. 1st DCA 2016).

On remand, the trial court entered an Amended Final Judgment pursuant to this Court’s mandate. Appellee then filed an “Amended and Restated Motion for Relief/Motion for New Trial” “from the amended final judgment pursuant to F.R.C.P. 1.540,” wherein it asserted in part as follows:

5. Subsequent to the trial, due to excusable neglect and newly discovered evidence, it was revealed that the parties did indeed enter into a written agreement for an additional advance for an amount not to exceed $500,000.00 for this transaction. . . .

6. This evidence was something that was lost/misplaced and forgotten due to simple human error. In and of itself, it is critical evidence in this matter and simply because of human error, it was not discovered or remembered until after the trial. . . .

7. The document was apparently in another file or a sea of documents and merely overlooked and forgotten.

[8]. As a result, Plaintiff request[s] relief in the manner of a New Trial in light of the new evidence.

The alleged newly discovered evidence was an Agreement for Additional Advance, which was dated September 2010, was signed by Chad Tribe and Appellant Scott Cleveland, and stated in part, “Pursuant to the Profit Sharing Agreement between the parties . . ., `the aggregate amount outstanding at any one time shall never exceed the sum of $300,000.00.’ Crown agrees to increase this amount to $500,000.00 for this one-time transaction that is currently booked.” In support of Appellee’s motion, Tribe submitted an affidavit, attesting in part that “[t]he agreement for additional advance was not located in the file maintained by [Appellee], but a copy was subsequently located in the possession of the broker”[1] and “[i]n its most simple terms, I made a simple human error mistake regarding an important document.”

Appellants opposed the motion, arguing that the Agreement for Additional Advance did not constitute newly discovered evidence because Appellee failed to establish that it could not have timely discovered it by due diligence and it was merely forgotten evidence newly remembered. The trial court entered an Order Granting New Trial and Relief from Judgment, wherein it granted “[Appellee’s] motion for new trial and alternatively, its motion for relief from judgment” upon finding that “[the Agreement for Additional Advance], located after the trial in the hands of the plaintiff’s broker, constitutes new evidence discovered after the trial that could not have been discovered before the trial by exercise of due diligence . . ..” This appeal followed.

Analysis

“`The importance of finality in any justice system . . . cannot be understated. It has long been recognized that, for several reasons, litigation must, at some point, come to an end.'” Balmoral Condo. Ass’n v. Grimaldi, 107 So. 3d 1149, 1151 (Fla. 3d DCA 2013) (quoting Witt v. State, 387 So. 2d 922 (Fla. 1980)). “Reflecting a balance between the need for finality and the interest of allowing appropriate corrections to final orders, rules 1.530 and 1.540 [of the Florida Rules of Civil Procedure] provide two very different approaches for judges to revisit final judgments.” Id. A trial court’s ruling on a rule 1.540 motion is reviewed for an abuse of discretion. Travelers Commercial Ins. Co. v. Harrington, 187 So. 3d 879, 884 (Fla. 1st DCA 2016); see also Leach v. Salehpour, 19 So. 3d 342, 344 (Fla. 2d DCA 2009) (explaining the same and that a ruling on a rule 1.530 motion is likewise reviewed for an abuse of direction, unless it involves a pure question of law).

Florida Rule of Civil Procedure 1.540(b) provides in relevant part that pursuant to a timely filed motion, a trial court may relieve a party from a final judgment based on “newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial or rehearing.” “[R]ule 1.540(b), however, `does not have as its purpose or intent the reopening of lawsuits to allow parties to state new claims or offer new evidence omitted by oversight or inadvertence.'” Hooks v. Quaintance, 71 So. 3d 908, 911 (Fla. 1st DCA 2011) (citation omitted). “The necessary finality of litigation prohibits courts from giving parties a second chance at proof they had available in the first instance but overlooked or chose not to use.” Id. “Relief from judgment based on newly discovered evidence claim should be seldom granted and only when the party seeking relief has exercised due diligence.” Id. “It is the movant’s burden under rule 1.540(b) to establish the exercise of due diligence. It is not sufficient to merely show that the evidence was not known or discovered by counsel prior to trial. Rather, the movant must make his or her vigilance apparent.” Brown v. McMillian, 737 So. 2d 570, 571 (Fla. 1st DCA 1999); see also Junda v. Diez, 848 So. 2d 457, 458 (Fla. 4th DCA 2003) (explaining that relief from judgment based on newly discovered evidence should be granted seldom and only when the party seeking relief exercised due diligence, and concluding that the trial court abused its discretion by granting the appellee’s 1.540(b) motion based on newly discovered evidence “[g]iven the length of time the case was pending, the fact that [appellee] knew of the existence of the necessary documentation before the initial trial, the lack of the exercise of due diligence by [appellee]”).

Florida Rule of Civil Procedure 1.530(a) states in pertinent part that “[o]n a motion for a rehearing of matters heard without a jury . . ., the court may open the judgment if one has been entered, take additional testimony, and enter a new judgment.” A newly discovered evidence claim may also be the basis for relief pursuant to rule 1.530, but a rehearing or new trial based on newly discovered evidence is warranted only where the evidence was discovered after the trial and could not have been discovered before the trial by the exercise of due diligence. Mistretta v. Mistretta, 31 So. 3d 206, 208 (Fla. 1st DCA 2010). Forgotten evidence does not constitute newly discovered evidence. See Resort of Indian Spring, Inc. v. Indian Spring Country Club, Inc., 747 So. 2d 974, 978 (Fla. 4th DCA 1999) (involving a rule 1.530 motion); Holmes v. Holmes, 578 So. 2d 323, 325 (Fla. 4th DCA 1991) (entailing a rule 1.540 motion).

Further, courts generally do not provide parties with an opportunity to retry their case upon a failure of proof. Correa v. U.S. Bank N.A., 118 So. 3d 952, 956 (Fla. 2d DCA 2013) (citing cases refusing to give a party a second bite at the apple and concluding, “Counsel for U.S. Bank should have been fully aware of its burden to reestablish the lost note and fully prepared to meet that burden, yet it made minimal effort to address this issue even after prodding by the trial court. There is simply no reason to afford it a second opportunity to prove its case”); see also Allard v. Al-Nayem Int’l, Inc., 59 So. 3d 198, 202 (Fla. 2d DCA 2011) (stating that a party’s failure to prove damages is an improper ground for rehearing because “`[r]ehearing is not intended as a device to present additional evidence that was available, although not presented, at the original trial,'” and concluding that the trial court improperly granted the appellee’s motion for rehearing where “[the appellee] persisted that its interpretation of Burton was the only correct measure of damages, despite considerable debate below about the correct measure of damages and [the appellant’s] argument that improvements must be considered. [The appellee] `consciously elected to proceed upon . . . what was ultimately determined to be an invalid theory of damages'”). Cf. Gulf Eagle, LLC v. Park E. Dev., Ltd., 196 So. 3d 476, 477 (Fla. 2d DCA 2016) (explaining that in order to reopen a case, a party must generally establish that the presentation of the evidence will not unfairly prejudice the opposing party and the reopening will serve the best interests of justice, and reversing the order vacating a deficiency judgment that had been entered against the appellees following a bench trial upon concluding that both factors were met where the trial court improperly denied the appellees’ motion for directed verdict based on an incorrect finding, as a result of which the appellant could not move for a rehearing to present additional evidence, and emphasizing that the appellant could not be penalized for its good faith reliance on the trial court’s ruling).

Turning to the case before us, the trial court granted Appellee’s rule 1.540 motion upon finding that the Agreement for Additional Advance constitutes newly discovered evidence that could not have been discovered before the trial with the exercise of due diligence. As Appellants argue, however, Appellee failed to meet its burden of establishing that it could not have discovered the document with the exercise of due diligence. In fact, Appellee did not present any evidence of—or even allege—its exercise of due diligence and instead claimed only that the document was “lost/misplaced and forgotten due to simple human error”/”merely overlooked and forgotten.” As such, the Agreement for Additional Advance does not constitute newly discovered evidence, and the trial court abused its discretion in finding otherwise.

Apparently recognizing the trial court’s error, Appellee does not dispute Appellants’ contention and instead argues that we should affirm pursuant to the tipsy coachman doctrine.[2] Appellee claims that its motion should be construed as seeking relief under rule 1.530 and the granting of relief pursuant to that rule was required because it does not result in any undue prejudice to Appellants, it promotes the interests of justice, and it avoids an inequitable windfall to Appellants. Appellee primarily relies on Gulf Eagle, LLC in support of its argument, but that reliance is misplaced. Even if Appellee’s motion is construed as seeking relief under rule 1.530, the fact remains that the trial court’s granting of relief was based upon its erroneous finding that the Agreement for Additional Advance constitutes newly discovered evidence. Additionally, unlike in Gulf Eagle, LLC, Appellee was not relying on an erroneous ruling by the trial court, but upon its own strategy that proved to be unsuccessful. Appellee made a strategic decision in arguing throughout the proceeding, until the conclusion of the first appeal, that any advance over $300,000 was secured by the future advances clause of the Mortgage. When this Court rejected Appellee’s theory and remanded for the recalculation of Appellants’ indebtedness, Appellee changed course of action and sought the trial court’s consideration of the Agreement for Additional Advance to prove that its entitlement was not capped at $300,000. Appellee even admits such a change in strategy by arguing on appeal as follows:

[Appellee] filed this foreclosure action with the mistaken belief that there was no agreement amending the maximum credit limitation clause in the Profit Sharing Agreement. And [Appellee] concluded such agreement would be unnecessary for the Trial Court to consider anyway for various legal reasons including that the Mortgage secures additional advances from [Appellee] up to a maximum of twice the principal amount of debt originally loaned. . . Once this Court reversed the Trial Court in Cleveland—disapproving [Appellee’s] reliance on the future advance clause in the Mortgage to secure amounts exceeding $300,000.00—it became necessary for [Appellee] to establish that the parties amended the maximum limitation clause in the Profit Sharing Agreement, written evidence of which [Appellee] had fortunately discovered after trial.

Appellee chose to rely on that strategy even though the amount of loans secured was in dispute, Appellants disagreed with its interpretation of the Profit Sharing Agreement and Mortgage, and Tribe—the same person who in 2010 signed the newly offered document—was asked at trial about any amendments to the Profit Sharing Agreement to reflect the increased advance. Given such, contrary to Appellee’s argument, the reopening of the case would not serve the best interests of justice and would provide Appellee with the type of second opportunity to prove its case that is condemned by the courts.

Conclusion

For the foregoing reasons, we reverse the trial court’s Order Granting New Trial and Relief from Judgment.

REVERSED.

WOLF and WETHERELL, JJ., CONCUR.

NOT FINAL UNTIL TIME EXPIRES TO FILE MOTION FOR REHEARING AND DISPOSITION THEREOF IF FILED.

[1] During trial, Tribe testified that most of the communication between the parties had gone through a broker who introduced Appellee to Appellant Scott Cleveland.

[2] The tipsy coachman doctrine allows an appellate court to affirm a trial court that reaches the right result for the wrong reasons if there is any basis in the record that would support the judgment. Robertson v. State, 829 So. 2d 901, 906 (Fla. 2002).

 

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TFH 3/5 | Foreclosure Workshop #28: Bank of America v. Reyes-Toledo — An Important Starting Point for Exposing “The Great Deception” Hiding Who Is Really Foreclosing on American Homeowners

TFH 3/5 | Foreclosure Workshop #28: Bank of America v. Reyes-Toledo — An Important Starting Point for Exposing “The Great Deception” Hiding Who Is Really Foreclosing on American Homeowners

COMING TO YOU LIVE DIRECTLY FROM THE DUBIN LAW OFFICES AT HARBOR COURT, DOWNTOWN HONOLULU, HAWAII

LISTEN TO KHVH-AM (830 ON THE AM RADIO DIAL)

ALSO AVAILABLE ON KHVH-AM ON THE iHEART APP ON THE INTERNET

.

.

Sunday –  March 5

Foreclosure Workshop #28: Bank of America v. Reyes-Toledo — An Important Starting Point for Exposing “The Great Deception” Hiding Who Is Really Foreclosing on American Homeowners
———————

Hawaii has now joined Connecticut, Florida, New Mexico, New York, Ohio, Oklahoma, and Vermont as the result of another recent landmark foreclosure-related decision of the Hawaii Supreme Court, the most comprehensive of its kind yet, adopting the principle that a foreclosing plaintiff has the evidentiary burden to establish its right to enforce a promissory note at the time it commenced its action.

While it might seem to be just common sense proving you own a debt before bringing a collection lawsuit, the right to challenge the ownership of promissory notes in foreclosure litigation has somehow been remarkably denied to most American homeowners, including heretofore in Hawaii, since the advent of securitized trusts.

And indeed that evidentiary challenge to standing is generally denied in trust deed litigation in California to this day, where an estimated tens of thousands of California homeowners still lose their homes annually to those with arguably no ownership interest whatsoever in their loans, notwithstanding the relatively recent embarrassingly disappointing Yvanova decision of the California Supreme Court.

The exceptionally well-reasoned Toledo decision of the Hawaii Supreme Court, on the other hand, which should be of enormous benefit to mortgagors in other jurisdictions nationwide, has now opened the door much wider to the even more fundamental underlying question concerning why such a central evidentiary issue has been so mysteriously ignored in most jurisdictions for so many decades.

On The Foreclosure Hour this Sunday, John Waihee and I will definitively answer that question and expose on this Sunday’s show what might correctly be called “The Great Deception,” going even beyond the new landmark Toledo decision of the Hawaii Supreme Court, taking the next step needed, explaining who has really been foreclosing behind the scenes on America’s homeowners.

It has been repeatedly argued nationally in another context that one cannot defeat an adversary until it knows, names, and acknowledges who that adversary is.

Most listeners will be surprised, shocked, and angered, and for good reason once “The Great Deception” is exposed on what may be the most important show since we went on the radio seven years ago.

Please join us this Sunday to learn who is the intentionally undisclosed “real party in interest” in most foreclosures in the United States.

And our Mainland listeners please note that the Nation goes on Daylight Savings Time in one week when The Foreclosure Hour (except in Hawaii which remains on Standard Time) will be heard one hour later on the iHeart Internet App.

~

.
Host: Gary Dubin Co-Host: John Waihee

.

CALL IN AT (808) 521-8383 OR TOLL FREE (888) 565-8383

Have your questions answered on the air.

Submit questions to info@foreclosurehour.com

The Foreclosure Hour is a public service of the Dubin Law Offices

Past Broadcasts

EVERY SUNDAY
3:00 PM HAWAII
5:00 PM PACIFIC
8:00 PM EASTERN
ON KHVH-AM
(830 ON THE DIAL)
AND ON
iHEART RADIO

The Foreclosure Hour 12

 

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in STOP FORECLOSURE FRAUD0 Comments

U.S. Justice Department targets executives in Wells Fargo CRIMINAL probe -sources

U.S. Justice Department targets executives in Wells Fargo CRIMINAL probe -sources

LOL… We all know how this will end. NO handcuffs!

Reuters-

A U.S. Justice Department probe into a phony accounts scandal at Wells Fargo & Co is asking whether executives hid details from the company board and regulators as the problem grew over years, sources familiar with the review said.

The move carries into the Trump era an investigation started under the Obama administration, and could result in criminal charges against bank employees involved.

The Justice Department this week was due to interview federal bank examiners in Charlotte, North Carolina, and ask whether low-level employees broke the law by opening accounts without customer knowledge and if company executives took part in a conspiracy. A grand jury convened in the Northern District of California has also sent subpoenas to witnesses, including former Wells Fargo employees, the sources said.

[REUTERS]

 

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Posted in STOP FORECLOSURE FRAUD1 Comment

Covington and Burling Lawyer Jumps to Death 24 hours after a Wall Street Executive Jumps to Death

Covington and Burling Lawyer Jumps to Death 24 hours after a Wall Street Executive Jumps to Death

The suicide comes about 24 hours after Kevin Bell, 47, a financial company executive, jumped to his death from the famed Apthorp building, where he lived, on the Upper West Side.

Stories are here:

Lawyer jumps to his death from Park Avenue building

http://nypost.com/2017/03/02/man-jumps-to-his-death-from-park-avenue-building/

&

‘Depressed’ Wall Street exec jumps to his death

http://nypost.com/2017/03/01/depressed-financial-exec-jumps-to-his-death/

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in STOP FORECLOSURE FRAUD2 Comments

Kentucky AG Beshear: Settlement with MERSCORP (MERS) National Mortgage Recording Company Provides Better Protections for Kentucky Homeowners

Kentucky AG Beshear: Settlement with MERSCORP (MERS) National Mortgage Recording Company Provides Better Protections for Kentucky Homeowners

Terry Sebastian or Crystal Staley502-696-5300http://ag.ky.gov/
700 Capitol Avenue, Suite 118FrankfortKY40601

Agreement allows AG to provide $2.8 million to state’s General Fund

FRANKFORT, Ky. (Feb. 28, 2017) – Attorney General Andy Beshear today announced a multimillion dollar settlement with a national mortgage recording company that will provide Kentucky homeowners with some of the best protections in the country.

The settlement resolves claims against MERSCORP Holdings Inc. and its wholly owned subsidiary Mortgage Electronic Registration Systems Inc., or MERS, over allegations the company named itself as the mortgagee in public land records, thereby hiding the identity of the big banks who were the actual owners of the mortgages, while also failing to monitor the conduct of those banks.

In addition to new protections for Kentucky homeowners, the settlement will result in Beshear returning $2.8 million to the state’s General Fund. Beshear is recommending lawmakers use the $2.8 million to support affordable housing, legal aid foreclosure work and to help the budgets of local county clerks.

MERS was created in 1995 to enable the mortgage industry to evade state recording fees, allow for the rapid sale and securitization of mortgages, and shorten the time it takes to pursue foreclosure actions. The company’s corporate shareholders included, among others, Bank of America, Wells Fargo, Fannie Mae, Freddie Mac and the Mortgage Bankers Association. In mid-2016, Intercontinental Exchange (ICE), a finance company that owns exchanges and clearinghouses for financial and commodity markets including the New York Stock Exchange, acquired a majority stake in MERSCORP Holdings.

“The mortgages of hundreds of thousands of Kentuckians are registered on the MERS database,” Beshear said. “This settlement brings a measure of much-needed transparency and accountability to a private mortgage registry that too often operates behind closed doors. Kentuckians will now have among the best protections in this process as this settlement imposes certain requirements on MERS to ensure that its information is accessible and accurate.”

While several state attorneys general have sued MERS and/or its member banks for their conduct related to their use of the MERS System, Kentucky’s settlement represents the largest state attorney general recovery against MERS itself, Beshear said.

MERS came under heavy scrutiny for its role in the national housing market crisis and entered into a Consent Decree with federal regulators in 2011 to address its conduct. The Commonwealth alleged that MERS violated the Kentucky Consumer Protection Act by obscuring and not monitoring the practices of its member banks.

Actions included foreclosing in the name of MERS instead of the actual owner or servicer of the mortgage; assigning the mortgage after foreclosure proceedings had already started; using employees of its member banks as signing officers to act in MERS’ name; and failing to ensure that the data on the MERS system was accurate.

Beshear said the settlement puts in place penalties that will be levied against MERS if it violates its obligations to Kentucky homeowners.

  • If MERS files a foreclosure in its own name in Kentucky, the company will pay the Commonwealth $10,000.
  • Each time MERS assigns a mortgage out of if its name to a foreclosing bank after the foreclosure has been filed in court, the company must pay $1,000 to the Commonwealth. This relief penalizes MERS when its members rush foreclosure proceedings without assigning the mortgage to its proper owner beforehand.
  • MERS, for a period of 5 years, will conduct document reviews of at least 100 Kentucky mortgages annually to confirm that only properly appointed signing officers are taking action on behalf of MERS.
  • MERS will provide auditing and data reconciliation reports to Beshear’s office for 5 years, allowing his office to determine whether the company is accurately tracking the transactions of its members.

While the settlement does not preclude banks from using the MERS System, Beshear will partner with county clerks to provide Kentuckians information on how the online database works.

“Similar to my recommendation that funds from the OxyContin settlement go to support drug treatment centers across the state, I’m asking lawmakers to use money from this settlement to assist Kentuckians with affordable housing and legal aid, along with supporting the budgets of our local county clerks who were affected financially by the actions of MERS,” Beshear said.

###

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HUNGATE vs THE LAW OFFICE OF DAVID B. ROSEN, DAVID B. ROSEN, AND DEUTSCHE BANK NATIONAL TRUST COMPANY | HI SC – violated statutory, contractual, and common law duties,  and committed unfair or deceptive acts or practices (UDAP)

HUNGATE vs THE LAW OFFICE OF DAVID B. ROSEN, DAVID B. ROSEN, AND DEUTSCHE BANK NATIONAL TRUST COMPANY | HI SC – violated statutory, contractual, and common law duties, and committed unfair or deceptive acts or practices (UDAP)

h/t Dubin Law Offices

*** FOR PUBLICATION IN WEST’S HAWAI?I REPORTS AND PACIFIC REPORTER ***

Electronically Filed
Supreme Court
SCAP-13-0005234
27-FEB-2017
08:01 AM

IN THE SUPREME COURT OF THE STATE OF HAWAI?I

—o0o—
_______________________________________________________________

RUSSELL L. HUNGATE,
Plaintiff-Appellant,

vs.

THE LAW OFFICE OF DAVID B. ROSEN, A LAW CORPORATION,
DAVID B. ROSEN, and DEUTSCHE BANK NATIONAL TRUST COMPANY,
Defendants-Appellees.
________________________________________________________________

SCAP-13-0005234

APPEAL FROM THE CIRCUIT COURT OF THE FIRST CIRCUIT
(CAAP-13-0005234; CAAP-14-0000772; CIVIL NO. 13-1-2146;
CIVIL NO. 13-1-2146)

FEBRUARY 27, 2017

RECKTENWALD, C.J., NAKAYAMA, McKENNA, POLLACK, AND WILSON, JJ.

OPINION OF THE COURT BY WILSON, J.

This case concerns a non-judicial foreclosure

conducted pursuant to Hawai?i Revised Statutes (HRS) § 667 Part I
____*** FOR PUBLICATION IN WEST’S HAWAI?I REPORTS AND PACIFIC REPORTER ***____

(Supp. 2008), which was repealed by the state legislature on

June 28, 2012 by Act 182. Plaintiff-Appellant Russell L.

Hungate (Hungate) appeals the Circuit Court of the First

Circuit’s (circuit court) order granting Defendants-Appellees

David B. Rosen’s and his law office’s (collectively, Rosen)

motion to dismiss the complaint. Hungate also appeals the

circuit court’s order granting Defendant-Appellee Deutsche Bank

National Trust Company’s (Deutsche Bank) motion to dismiss the

first amended complaint.1

On appeal, we consider whether the circuit court

wrongly dismissed Hungate’s claims alleging Deutsche Bank and

Rosen violated statutory, contractual, and common law duties,

and committed unfair or deceptive acts or practices (UDAP). We

conclude the circuit court erred in dismissing the majority of

Hungate’s claims. Accordingly, we vacate in part the circuit

court’s November 5, 2013 order granting Rosen’s motion to

dismiss, vacate in part the circuit court’s April 8, 2014 order

granting Deutsche Bank’s motion to dismiss, and remand for

further proceedings.

1
On appeal, Hungate’s case was split into two appellate case
numbers. SCAP-13-0005234 is Hungate’s appeal of the circuit court’s order
dismissing the original complaint. SCAP-14-0000772 is Hungate’s appeal of
the circuit court’s order dismissing the first amended complaint, which
Hungate filed after the circuit court dismissed his original complaint.
Hungate’s cases were consolidated by this court into SCAP-13-0005234.

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I. Background

Because the circuit court dismissed Hungate’s August

6, 2013 complaint and his first amended complaint, filed

December 19, 2013, pursuant to Hawai?i Rules of Civil Procedure

(HRCP) Rule 12(b)(6) (2000), we take the factual allegations

from the complaints as true for purposes of this appeal. See

Young v. Allstate Ins. Co., 119 Hawai?i 403, 406, 198 P.3d 666,

669 (2008). Hungate’s initial complaint and first amended

complaint included the following factual allegations.

A. Factual Allegations

Hungate secured a mortgage loan from IndyMac Bank,

F.S.B. (IndyMac), in the amount of $324,090 to purchase real

property in Kal?heo, Kaua?i in 2007.2 Hungate executed the

mortgage on February 10, 2007 and recorded it in the Bureau of

Conveyances on February 16, 2007. In March 2007, IndyMac

assigned its interest in Hungate’s mortgage to one of its

subsidiaries, which then assigned its interest to Deutsche Bank.

To address the possibility of foreclosure, the

mortgage contract included a power of sale clause that allowed

the property to be sold through a non-judicial foreclosure. The

power of sale clause, found in section 22 of Hungate’s mortgage,

2
At the proceeding on Rosen’s motion to dismiss, Hungate’s counsel
represented that the property was a vacant 10,000 square foot lot with ocean
views. Hungate planned to build a “dream home” on the property but he did
not proceed with his plan after he experienced financial difficulties.

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reads in relevant part as follows: “Lender shall publish a

notice of sale and shall sell the Property at the time and place

and under the terms specified in the notice of sale.”

On August 5, 2008, IndyMac notified Hungate that his

loan was in default because he had not made the required

payments. On January 14, 2009, an individual acting on behalf

of IndyMac3 executed a notice of mortgagee’s intention to

foreclose under power of sale. On March 16, 2009, the notice of

intention of foreclosure was properly filed at the Bureau of

Conveyances by IndyMac on behalf of Deutsche Bank as the holder

of the note. The notice offered Hungate’s property for sale

with a quitclaim deed and made no warranties.

Deutsche Bank retained Rosen, a Hawai?i-licensed

attorney, to conduct the foreclosure of Hungate’s property.

Deutsche Bank followed the non-judicial foreclosure process set

forth in HRS § 667 Part I.4

To begin the non-judicial foreclosure process, Rosen

published a notice of sale in The Garden Island, a newspaper of

general circulation, as required by former HRS § 667-5(a)(1)

(Supp. 2008). Under HRS § 667-5(a)(1), the attorney must

3
The record is unclear as to whether the individual was employed
by IndyMac or another entity.
4
An alternative non-judicial foreclosure process with additional
statutory requirements, codified in HRS § 667 Part II (Supp. 2008), was also
available.

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publish the notice of the mortgagee’s intention to foreclose

“once in each of three successive weeks . . . in a newspaper

having a general circulation in the county in which the

mortgaged property lies[.]” In compliance with this

requirement, Rosen published a notice of sale once a week for

three weeks on March 20, March 27, and April 3, 2009. The

notice of sale stated a sale date of April 17, 2009.5

Rosen then postponed the sale a total of four times in

2009: from April 17 to May 15, from May 15 to June 12, from June

12 to July 17, and from July 17 to August 14. These dates were

never published. Whether the postponement was publicly

announced to the bidders who attended each sale date, as

required by HRS § 667-5(d), is contested.

At the August 14, 2009 sale, Deutsche Bank was the

sole bidder with a winning credit bid of approximately $161,250.

This amount was substantially below the market value of

Hungate’s property. A “Mortgagee’s Grant Deed Pursuant to Power

of Sale” was recorded at the Bureau of Conveyances on October

30, 2009 by Deutsche Bank.

B. Procedural History

On August 6, 2013, Hungate filed his initial complaint

against Rosen and Deutsche Bank. Hungate contended that

5
The notice states, in relevant part, that the mortgagee “gives
notice that Mortgagee will hold a sale by public auction on April 17, 2009 at
12:00 noon At [sic] the flagpole fronting the fifth circuit court building.”

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Deutsche Bank and Rosen wrongfully conducted the foreclosure of

Hungate’s property by (1) advertising a proposed sale date 28

days after the date of the first published notice, when HRS §

667-76 required that the sale date be at least 29 days after the

first published notice; (2) failing to publicize the postponed

sale date, in violation of the mortgage’s power of sale clause;

and (3) breaching their common law duty to secure the best

possible price for the property. Hungate also argued that

Deutsche Bank and Rosen violated HRS § 480-27 because their

actions constituted unfair and deceptive trade acts or practices

and resulted in unfair methods of competition.

Rosen filed a motion to dismiss under HRCP Rule

12(b)(6). Rosen argued (1) the initial sale date was scheduled

after the expiration of four weeks, when including the date

first advertised, and thus he complied with HRS § 667-7; (2)

6
HRS § 667-7 (Supp. 2008) states as follows:

(a) The notice of intention of foreclosure shall contain:
(1) A description of the mortgaged property; and
(2) A statement of the time and place proposed for
the sale thereof at any time after the
expiration of four weeks from the date when
first advertised.

(b) The affidavit described under section 667-5 may
lawfully be made by any person duly authorized to act
for the mortgagee, and in such capacity conducting
the foreclosure.
7
HRS § 480-2(a) (2008) states that “[u]nfair methods of
competition and unfair or deceptive acts or practices in the conduct of any
trade or commerce are unlawful.”

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publication of a sale postponement notice was not required by

HRS § 667-5(d)8 or the mortgage;9 and (3) Rosen is not liable to

Hungate because Rosen did not owe a duty of care to Hungate, a

non-client.

On November 5, 2013, the circuit court granted Rosen’s

motion to dismiss.10 The court ruled that (1) Rosen complied

with HRS §§ 667-5 and 667-7 as a matter of law; (2) HRS § 667-

5(d) and the power of sale clause of the mortgage did not

require publication of the postponement of the non-judicial

foreclosure sale; (3) Hungate lacked standing to assert claims

under HRS chapter 480; and (4) Hungate’s common law claims were

foreclosed because Rosen did not owe a duty to Hungate.

On December 19, 2013, Hungate filed his first amended

complaint against Rosen and Deutsche Bank. The claims were

nearly identical to those alleged in the initial complaint.11

8
HRS § 667-5(d)(Supp. 2008) states in relevant part as follows:
“Any sale, of which notice has been given . . . may be postponed from time to
time by public announcement made by the mortgagee or by a person acting on
the mortgagee’s behalf.”
9
Rosen noted that the notice of mortgagee’s intention to foreclose
under power of sale stated that “[t]his sale may be postponed from time to
time by public announcement made by Mortgagee or someone acting on
Mortgagee’s behalf.” (Emphasis omitted).
10
The Honorable Rhonda A. Nishimura presided.
11
In addition to the claims raised in the initial complaint,
Hungate alleged that Deutsche Bank’s practice of granting quitclaim deeds,
rather than limited warranty deeds, was an unfair and deceptive trade
practice. This claim is not an issue before the court.

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Deutsche Bank filed a motion to dismiss the first

amended complaint, making arguments similar to those presented

by Rosen.

On April 8, 2014, the circuit court granted in part12

Deutsche Bank’s motion to dismiss Hungate’s first amended

complaint. As with its prior dismissal of Hungate’s August 6,

2013 complaint, the court ruled that (1) Deutsche Bank complied

with the notice requirement under HRS §§ 667-5 and 667-7 as a

matter of law, and (2) HRS § 667-5(d) and the power of sale

clause did not require that postponements of sale be published.

After appealing to the Intermediate Court of Appeals,

the parties filed applications for transfer that were

subsequently granted by this court.

II. Standards of Review

A. Motion to Dismiss

The circuit court’s grant of a motion to dismiss is

reviewed de novo. Kamaka v. Goodsill Anderson Quinn & Stifel,

117 Hawai?i 92, 104, 176 P.3d 91, 103 (2008), as amended (Jan.

25, 2008). Further, the appellate court must accept the

allegations made in the complaint as true and “view them in the

12
The circuit court stayed Hungate’s claim regarding Deutsche
Bank’s use of quitclaim deeds pending the appeals in Lima v. Deutsche Bank
National Trust Co., No. 13-16091 (9th Cir. filed May 30, 2013); Gibo v.
United States Bank National Ass’n, No. 13-16092 (9th Cir. filed May 30,
2013); and Bald v. Wells Fargo Bank, N.A., No. 13-16622 (9th Cir. filed Aug.
12, 2013), which raised the same or similar issues.

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light most favorable to the plaintiff[s]; dismissal is proper

only if it ‘appears beyond doubt that the plaintiff[s] can prove

no set of facts in support of [their] claim[s] that would

entitle [them] to relief.’” Wong v. Cayetano, 111 Hawai?i 462,

476, 143 P.3d 1, 15 (2006)(citations omitted). “However, in

weighing the allegations of the complaint as against a motion to

dismiss, the court is not required to accept conclusory

allegations on the legal effect of the events alleged.” Pavsek

v. Sandvold, 127 Hawai?i 390, 403, 279 P.3d 55, 68 (App. 2012)

(citation omitted).

B. Statutory Interpretation

Statutory interpretation is reviewable de novo.

Citizens Against Reckless Dev. v. Zoning Bd. of Appeals, 114

Hawai?i 184, 193, 159 P.3d 143, 152 (2007). When construing

statutes, the court is governed by the following rules:

First, the fundamental starting point for statutory
interpretation is the language of the statute itself.
Second, where the statutory language is plain and
unambiguous, our sole duty is to give effect to its plain
and obvious meaning. Third, implicit in the task of
statutory construction is our foremost obligation to
ascertain and give effect to the intention of the
legislature, which is to be obtained primarily from the
language contained in the statute itself. Fourth, when
there is doubt, doubleness of meaning, or indistinctiveness
or uncertainty of an expression used in a statute, an
ambiguity exists.

When there is ambiguity in a statute, “the meaning of
the ambiguous words may be sought by examining the context,
with which the ambiguous words, phrases, and sentences may
be compared, in order to ascertain their true meaning.”
Moreover, the courts may resort to extrinsic aids in
determining legislative intent, such as legislative
history, or the reason and spirit of the law.

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Id. at 193-94, 159 P.3d at 152-53 (citations omitted).

C. Interpretation of Contracts

“[T]he construction and legal effect to be given a

contract is a question of law freely reviewable by an appellate

court.” Hawaiian Ass’n of Seventh-Day Adventists v. Wong, 130

Hawai?i 36, 45, 305 P.3d 452, 461 (2013)(citation omitted).

III. Discussion

Taking the facts alleged in Hungate’s complaints as

true, the circuit court improperly dismissed Hungate’s initial

complaint and first amended complaint. In reaching this

conclusion, we assess Hungate’s claims against Deutsche Bank and

Rosen, respectively.

In Part A, we hold the circuit court erred in

dismissing the majority of Hungate’s claims against Deutsche

Bank regarding the alleged HRS chapter 667 Part I violations.

Additionally, we conclude the mortgage’s power of sale clause

required Deutsche Bank to publish all postponements of the

foreclosure sale. Regarding Hungate’s HRS chapter 667 Part I

claims against Rosen, we conclude that the statute required

Rosen (1) to give proper notice of the sale date under former

HRS § 667-7 and (2) to give notice of the postponements of the

sale in accordance with the mortgage’s power of sale clause per

former HRS § 667-5. However, we hold that those statutory

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provisions do not create a private right of action against the

attorney of a foreclosing mortgagee. We conclude Hungate does

not have a cause of action against Rosen under former HRS § 667-

5 and his claims against Rosen based upon the mortgage’s power

of sale clause cannot stand.

In Part B, we determine that Deutsche Bank had a

common law duty to Hungate to use reasonable means to obtain the

best price for Hungate’s property. In Part C we hold that the

circuit court erred in dismissing Hungate’s unfair or deceptive

acts or practices claim against Deutsche Bank, but properly

dismissed Hungate’s UDAP claim against Rosen.

A. The Circuit Court Erred in Dismissing the Majority of
Hungate’s Claims Alleging HRS Chapter 667 Part I Violations
against Deutsche Bank

Hungate alleges that Deutsche Bank and Rosen

improperly conducted the foreclosure sale of Hungate’s property.

Specifically, Hungate contends Rosen and Deutsche Bank: (1)

advertised a foreclosure date earlier than permitted under HRS

§ 667 Part I; (2) failed to publish the notices of postponements

of the sale as was required by the power of sale clause; and (3)

improperly permitted a non-attorney to prepare and sign the

notice of sale.

We hold that the circuit court erred in dismissing

Hungate’s complaints against Deutsche Bank on the basis of the

first two allegations. As to the third allegation, former HRS

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§ 667-5 does not require a Hawai?i-licensed attorney to prepare

and sign a notice of sale, and we affirm in part the circuit

court’s April 8, 2014 order dismissing Hungate’s first amended

complaint.

Regarding the allegations against Rosen, we conclude

that Hungate does not have a cause of action against Rosen for

violating statutory requirements under HRS chapter 667, or for

his failure to adhere to the requirements of the mortgage’s

power of sale clause.

1. HRS § 1-29 Governs the Scheduling of a Foreclosure Sale
Under Former HRS § 667 Part I13

Former HRS § 667-7(a)(2) required that “[t]he notice

of intention of foreclosure shall contain: . . . A statement of

the time and place proposed for the sale [of the mortgaged

property] at any time after the expiration of four weeks from

the date when first advertised.” (Emphasis added). Thus,

13
The events at issue here occurred between 2007 and 2009. In the wake
of the mortgage crisis, the legislature formed a Mortgage Foreclosure
Task Force in 2010. See 2010 Haw. Sess. Laws, Act 162, § 2, at 375.
The Task Force recommended extensive changes to the Hawai?i foreclosure
statute in reports to the legislature in December 2010 and December
2011, and many of those changes were subsequently enacted by the
legislature in the 2011 and 2012 legislative sessions. See generally
Final Report of the Mortgage Foreclosure Task Force to the Legislature
for the Regular Session of 2012 (December 2011); see also 2011 Haw.
Sess. Laws, Act 48 at 84; 2012 Haw. Sess. Laws, Act 182, at 630. Among
other things, those revisions imposed UDAP liability on foreclosing
mortgagees for a series of specific violations of the statutory
procedures which now govern nonjudicial foreclosure. HRS § 667-60
(2016).

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whether the advertised sale date on April 17, 2009 was “after

the expiration of four weeks” is the crux of this issue.

Hungate contends that HRS § 1-29 is the proper method

to calculate whether Deutsche Bank and Rosen complied with HRS

§ 667-7. HRS § 1-29 (2009) provides that time periods are

calculated “by excluding the first day and including the

last[.]” Under Hungate’s analysis, Deutsche Bank and Rosen

advertised a foreclosure sale date that was exactly 28 days from

the date the notice was published, and therefore the sale was

not scheduled “after the expiration of four weeks.”

Deutsche Bank and Rosen argue that we should apply the

time computation rule set forth in Silva v. Lopez, which

required that we “include the day of the first publication and

exclude the day the act is advertised to be done.” Silva, 5

Haw. 262, 270 (Haw. Kingdom 1884). The time computation rule of

Silva indicates that Deutsche Bank and Rosen advertised a sale

date in compliance with the four-week requirement.

We hold that HRS § 1-29 is the appropriate computation

rule. In 1923, the Hawai?i legislature passed Act 3, the

predecessor to HRS § 1-29, which set forth a time computation

rule that is substantially the same as HRS § 1-29. 1923 Haw.

Sess. Laws Act 3, § 1 at 2. To explain the necessity of Act 3,

the chair of the House Judiciary Committee noted that “under our

existing statutes no definition is given nor method supplied in

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the computation of time for the performance or completion of an

Act under contract or legal requirement[.]” H. Stand. Comm.

Rep. No. 9, in 1923 House Journal, at 97. Due to the absence of

a time computation provision, he explained that “numerous

interpretations [of time computation] based principally on the

decisions of other courts and jurisdictions” resulted. Id.

Silva is one such case that used the decisions of other courts

to determine a time computation rule. Specifically, the Silva

court cited a New Hampshire case in deciding that the day an act

occurred was included in computing time. Silva, 5 Haw. at 262.

By passing Act 3, which became HRS § 1-29, the Hawai?i

legislature outlined the procedure by which we now calculate

time. Thus, HRS § 1-29 sets forth the computation rule to be

used when calculating the scheduling of foreclosure sales

pursuant to HRS § 667 Part I.

HRS § 1-29 mandates that the earliest date for the

sale of Hungate’s property was April 18, 2009, and thus Deutsche

Bank did not give the requisite amount of notice. HRS § 1-29

states that “[t]he time in which any act provided by law is to

be done is computed by excluding the first day and including the

last[.]” Combined with the “after the expiration of four weeks”

language from HRS § 667-7(a)(2), HRS § 1-29 requires that March

20, 2009, the date Deutsche Bank and Rosen first published the

notice of sale, be excluded from the notice calculation as it

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was “the first day.” Counting four weeks—28 days—from March

21, 2009, results in the earliest possible sale date falling on

April 18, 2009. Accordingly, the circuit court erred in

determining that a sale date of April 17, 2009 complied with the

requirements of HRS § 667-7.

2. The Power of Sale Clause Required Deutsche Bank to
Publish Postponements of the Foreclosure Sale

Hungate argues that Deutsche Bank and Rosen were

required to publish all postponements of the April 17, 2009 sale

date for two reasons: (1) the original sale date advertised in

the notice was one day early and thus notice was not properly

given, and (2) the power of sale clause of Hungate’s mortgage

required publication of postponements of the foreclosure sale.

Deutsche Bank and Rosen contend the power of sale

clause cannot require publication of postponements because

former HRS § 667-5(d)(Supp. 2008) allows for sales to be

postponed “from time to time by public announcement[.]” This

section presupposes, however, that “notice has been given” in

accordance with HRS § 667-7(a)(2).14 Former HRS § 667-5(d). As

noted supra, Deutsche Bank did not comply with the time

computation required by HRS § 667-7(a)(2) and thus did not, as

14
Because former HRS §§ 667-5 and 667-7 are in pari materia,
inasmuch as they both discuss the notice of intention of foreclosure, we read
the two statutes together. See HRS § 1-16 (2009) (“Laws in pari materia, or
upon the same subject matter, shall be construed with reference to each
other.”).

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required by HRS § 667-5(d), give proper notice. Therefore,

Deutsche Bank cannot avail itself of the public announcement

postponement method in HRS § 667-5(d).

Even assuming Deutsche Bank provided timely notice of

the date of sale by public announcement, Hungate contends

Deutsche Bank was required—pursuant to former HRS § 667-

5(a)(2)—to publish all postponements of the foreclosure sale in

compliance with the mortgage’s power of sale clause. HRS § 667-

5(a)(2) states that the attorney shall “[g]ive any notices and

do all acts as are authorized or required by the power [of sale]

contained in the mortgage.” (Emphasis added). Thus, if the

mortgage’s power of sale clause requires more than what is

required under HRS § 667 Part I, the mortgagee must follow the

requirements of the power of sale clause. The relevant portion

of the power of sale clause of Hungate’s mortgage states: “If

Lender invokes the power of sale, . . . Lender shall publish a

notice of sale and shall sell the Property at the time and place

and under the terms specified in the notice of sale.” (Emphases

added). Under Hungate’s interpretation of the clause, any

change in the time, place, or terms specified in the notice of

sale, which includes the date, time, and place of the sale,

requires the lender to publish a new notice of sale with the new

terms.

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In contrast to Hungate’s position, Deutsche Bank and

Rosen interpret the power of sale clause to allow postponement

by public announcement because the notice of sale expressly

permits oral postponement. The power of sale clause states that

the mortgagee “shall sell the Property at the time and place and

under the terms specified in the notice of sale.” (Emphasis

added). Because the notice of sale expressly states that the

sale “may be postponed from time to time by public announcement

made by Mortgagee or someone acting on Mortgagee’s behalf,”

Deutsche Bank and Rosen assert that oral postponement complied

with the “terms specified in the notice of sale.” According to

Deutsche Bank’s and Rosen’s analysis of the power of sale

clause, only a single notice must be published, and not “a

notice of sale for each postponed date.” (Emphasis added)

(citing Lima v. Deutsche Bank Nat’l Trust Co., 943 F. Supp. 2d

1093, 1101 (D. Haw. 2013)). Thus, under Deutsche Bank’s and

Rosen’s interpretation of the power of sale clause, once a

notice of sale is published, the power of sale is complied with

as long as future postponements are publicly announced orally at

the time of the scheduled sale.

Because there are two reasonable interpretations of

the power of sale clause, an ambiguity exists as to whether a

new notice must be published to postpone the foreclosure sale.

See Wong, 130 Hawai?i at 45, 305 P.3d at 461 (explaining a

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contract is ambiguous “when its terms are reasonably susceptible

to more than one meaning”). The application of contract

interpretation principles to resolve the power of sale clause’s

ambiguity supports the conclusion that Deutsche Bank was

required to publish postponement notices. “[A]ny ambiguity in a

mortgage instrument should be construed against the party

drawing the documents,” State Sav. & Loan Ass’n v. Kauaian Dev.

Co., 62 Haw. 188, 198, 613 P.2d 1315, 1322 (1980), or in other

words, “against the party who supplies the words[.]”

Restatement (Second) of Contracts § 206 (Am. Law Inst. 1981).

The ambiguity in the power of sale clause should thus be

resolved against Deutsche Bank, as the party who supplied the

words of the contract. Thus, the more stringent interpretation,

which requires postponements of the sale be published through a

new notice, prevails. Accordingly, the circuit court should not

have dismissed Hungate’s complaints based on its reasoning that

Deutsche Bank was not required to publish all postponements of

the foreclosure sale.

3. A Hawai?i-licensed Attorney Is Not Required to Prepare or
Sign a Notice of the Mortgagee’s Intention to Foreclose

Former HRS § 667-5 (Supp. 2008) requires a mortgagee

foreclosing under a power of sale “be represented by an attorney

who is licensed to practice law in the State and is physically

located in the State.” HRS § 667-5(a). The attorney must

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“[g]ive notice of the mortgagee’s . . . intention to foreclose

the mortgage and of the sale . . . by publication” and “[g]ive

any notices and do all acts as are authorized or required by the

power contained in the mortgage.” HRS § 667-5(a)(1)-(2).

Hungate contends that Deutsche Bank did not comply with HRS

§ 667-5 because the notice of sale for Hungate’s property was

not prepared and signed15 by an attorney licensed in Hawai?i.16

The language of former HRS § 667-5 does not require a

Hawai?i-licensed attorney to prepare or sign the notice. Our

“fundamental starting point for statutory interpretation is the

language of [HRS § 667-5] itself.” Citizens Against Reckless

Dev., 114 Hawai?i at 193, 159 P.3d at 152. HRS § 667-5 only

requires an attorney to “give notice” and “do all acts as are

authorized or required” by the power of sale. HRS § 667-

5(a)(1)-(2). Neither of these requirements involves the

preparation and signing of a notice. The language of the

statute itself thus does not provide that a Hawai?i-licensed

attorney is required to prepare or sign a notice.

15
Hungate also uses the terminology that a non-attorney “published”
the notice. But, as Deutsche Bank notes, Hungate stated in his opening brief
in CAAP-13-0005234 that “Rosen caused to be published [the notice of sale] in
the Kauai publication The Garden Island.”
16
Deutsche Bank argues that Hungate waived this issue because it
was not properly raised at trial. Hungate explains that this issue was
raised in his memorandum in opposition to the motion to dismiss. Assuming
arguendo that this claim was not waived, this claim is nonetheless meritless.

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Additionally, the legislative history of HRS § 667-5

does not evince the intent that a Hawai?i-licensed attorney

prepare or sign a notice of the mortgagee’s intention to

foreclose. The legislature’s purpose in enacting HRS § 667-5

was to ensure that where a power of sale clause is included in

the mortgage, interested parties be able to request and timely

receive information. See Conf. Comm. Rep. No. 3-08, in 2008

House Journal, at 1710, 2008 Senate Journal, at 793; S. Stand.

Comm. Rep. No. 2108, in 2008 Senate Journal, at 917. To

accomplish this, the legislature required a mortgagee to hire a

Hawai?i-licensed attorney, who is physically present in the

state, to serve as a “contact individual” in order to facilitate

the providing of information. S. Stand. Comm. Rep. No. 2108, in

2008 Senate Journal, at 917. A Hawai?i-licensed attorney must

therefore serve as a contact individual and provide notice of a

mortgagee’s intent to foreclose on a property—but the

legislative history contains no indication of legislative intent

that the attorney prepare or sign a notice of the mortgagee’s

intention to foreclose.

Accordingly, the circuit court properly dismissed

Hungate’s first amended complaint as to his claim that a non-

attorney prepared and signed the notice of sale.

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4. Former HRS §§ 667-5 and 667-7 Create No Private Right of
Action Against a Foreclosing Mortgagee’s Attorney

Hungate contends Rosen owed statutory duties under HRS

§§ 667-5 and 667-7. In response, Rosen argues former HRS § 667-5

fails to involve the kind of “special relationship” between

Hungate and Rosen necessary for an attorney to owe a duty to a

non-client. Generally, a duty imposed on an attorney in favor

of an adversary of the attorney’s client poses an “unacceptable

conflict of interest.” Buscher v. Boning, 114 Hawai?i 202, 220,

159 P.3d 814, 832 (2007). For that reason, absent special

circumstances, attorneys owe no duty of care to non-clients. See

id. The question raised here is whether the requirements of

former HRS § 667-5 and former HRS § 667-7 impose duties that may

be enforced against the attorney of a foreclosing mortgagee

under a private right of action.

Requirements imposed by statutes do not necessarily

give rise to a private right of action. Cannon v. University of

Chicago, 441 U.S. 677, 688 (1979)(noting that the fact that a

“statute has been violated and some person harmed does not

automatically give rise to a private cause of action in favor of

that person”). In considering whether a duty imposed by statute

creates a private right of action, our court has consistently

focused on the intent of the legislature. Whitey’s Boat

Cruises, Inc. v. Napali-Kauai Boat Charters, Inc., 110 Hawai?i

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302, 312, 132 P.3d 1213, 1223 (2006). We review such questions

de novo as a matter of law. Namauu v. City & Cty. of Honolulu,

62 Haw. 358, 362, 614 P.2d 943, 946 (1980)(noting that “the

nature and extent of duty imposed by statute is a matter of

law”).

The language of former HRS § 667-5, as amended in

2008, indicates the legislature intended attorneys to provide

notice of the mortgagee’s intention to foreclose and notice of

the sale of the mortgaged property; the language also shows the

legislature intended attorneys to comply with the power of sale

clause in the mortgage. Former HRS § 667-5(a) explicitly states

that “[t]he attorney shall[] . . . [g]ive notice of the

mortgagee’s . . . intention to foreclose the mortgage and of the

sale of the mortgaged property.” (Emphasis added). In

addition, the attorney “shall . . . do all acts as are

authorized or required by the power contained in the mortgage,”

such as complying with the power of sale clause of the mortgage.

Former HRS § 667-5(a)(2) (emphasis added). An attorney thus is

required under the statute to give proper notice and to perform

all acts authorized or required by the power of sale clause.17

Although Rosen failed to follow some requirements of former HRS

17
Former HRS § 667-5(d), however, permits the mortgagee or “some
person acting on the mortgagee’s behalf”—not necessarily an attorney—to
postpone the sale by public announcement.

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§ 667-5, we hold that the statute did not create a cause of

action against attorneys who fail to follow its requirements.

In determining whether a private cause of action

should be recognized based on statutory requirements, we

consider the following factors: (1) whether the plaintiff is

“one of the class for whose especial benefit the statute was

enacted”; (2) whether there is “any indication of legislative

intent, explicit or implicit, either to create such a remedy or

to deny one”; and (3) whether a private cause of action would be

“consistent with the underlying purposes of the legislative

scheme to imply such a remedy for the plaintiff.” Whitey’s Boat

Cruises, 110 Hawai?i at 312, 132 P.3d at 1223. While each factor

is relevant, “the key factor” is whether the legislature

“intended to provide the plaintiff with a private right of

action.” Id. at 313 n.20, 132 P.3d at 1224 n.20; see also

Touche Ross & Co. v. Redington, 442 U.S. 560, 575 (noting that

the three factors used to assess whether a private cause of

action may be implied from statutory language ultimately “are

ones traditionally relied upon in determining legislative

intent”).

We first consider whether Hungate was a member of the

class for whose special benefit the statute was enacted. As

discussed supra, the statute was amended to benefit the “party

in breach of the mortgage agreement.” H. Stand. Comm. Rep. No.

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1192, in 2008 House Journal, at 1450. As the party in breach of

the mortgage contract, Hungate falls within the class for whom

the statute was enacted.

The second factor considers whether there is “any

indication of legislative intent, explicit or implicit, either

to create such a remedy or to deny one.” Whitey’s Boat Cruises,

Inc., 110 Hawai?i at 312, 132 P.3d at 1223. Former HRS § 667-5

and its legislative history are silent as to whether the

legislature intended to create a cause of action on behalf of

the mortgagor against the mortgagee’s lawyer.18 “[I]mplying a

private right of action on the basis of [legislative] silence is

a hazardous enterprise, at best.” Touche Ross & Co, 442 U.S. at

571. Nonetheless, legislative silence alone is not dispositive.

See 1A C.J.S. Actions § 62 (2016)(when a statute is silent, a

court may infer a statutory private right of action where there

is strong evidence that “the statutory scheme” implies it).

We turn, then, to the third factor, whether a private

cause of action would be consistent with “the underlying

purposes of the legislative scheme.” Whitey’s Boat Cruises,

Inc., 110 Hawai?i at 312, 132 P.3d at 1223. Here, amendments to

the foreclosure process set forth in HRS chapter 667 Part I were

intended to “expand[] the rights of mortgagors.” Kondaur

18
HRS § 667-4 (1993) does provide the mortgagor may defend against
foreclosure.

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Capital Corp. v. Matsuyoshi, 136 Hawai?i 227, 239, 361 P.3d 454,

466 (2015) (explaining that amendments to former HRS § 667-5

“added requirements that mortgagees must fulfill in order to

accomplish a valid foreclosure sale” resulting in a benefit to

mortgagors by “expand[ing] and bolster[ing] the protections to

which they are entitled”).

However, a close reading of the legislative history of

the 2008 amendment shows it was enacted to set additional

burdens on the mortgagee to protect the mortgagor; the statute

was not amended to regulate attorneys representing mortgagees.

The amendment’s structure or scheme attempted “to streamline and

ensure transparency in the non-judicial foreclosure process by

requiring a foreclosure mortgagee to provide pertinent

information regarding the property to interested parties.” S.

Stand. Comm. Rep. No. 2108, in 2008 Senate Journal, at 917

(emphasis added).

The committee reports explain that potential buyers

and other interested parties faced difficulties in obtaining

updated information regarding foreclosure sales from banks and

entities located outside of Hawai?i: “A large number of Hawaii

foreclosures are handled by servicing corporations located on

the mainland that provide little to no information relating to

the foreclosure to parties that are entitled to information

regarding the property to be foreclosed.” Conf. Comm. Rep. No.

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3-08, in 2008 House Journal, at 1710, 2008 Senate Journal, at

793. Due to the growing concern that mortgagees were creating

obstacles for parties seeking information, the legislature

required a mortgagee to hire a Hawai?i-licensed attorney, who is

physically present in the state, to serve as a “contact

individual.” S. Stand. Comm. Rep. No. 2108, in 2008 Senate

Journal, at 917. The legislature concluded that a “Hawaii-based

attorney will ensure that interested parties have a means to

obtain information from a person with a local presence and the

ability to provide useful information.” Conf. Comm. Rep. No. 3-

08, in 2008 House Journal, at 1710, 2008 Senate Journal, at 793.

Thus, the underlying structure and intent of the amendment was

to enable interested parties to request and receive information

in a timely manner from mortgagees, and not to regulate

attorneys’ conduct. Permitting a mortgagor to assert a claim

against the foreclosing mortgagee’s attorney for failure to

comply with former HRS § 667-5 falls outside this statutory

scheme.

We also consider the further factor of whether

“additional remedies are unnecessary” when determining whether

to recognize a new cause of action. Best Place, Inc. v. Penn

America Ins. Co., 82 Hawai?i 120, 126, 920 P.2d 334, 340 (1996).

In this case, creating a cause of action under former HRS § 667-

5 is not necessary to protect the interests of the mortgagor.

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Rather, the mortgagor can protect its interests through filing a

claim against the mortgagee for wrongful foreclosure. See

Santiago v. Tanaka, 137 Hawai?i 137, 158-59, 366 P.3d 612, 633-

34 (2016) (holding the nonjudicial foreclosure was wrongful and

awarding restitution to mortgagor). When voiding the

foreclosure is not possible, the mortgagor is entitled to

“restitution of their proven out-of-pocket losses” through a

wrongful foreclosure claim. Id. at 158, 366 P.3d at 633.

Because mortgagees could be required to provide restitution to

injured mortgagors under a wrongful foreclosure claim, a

“sufficient incentive” exists for mortgagees to ensure that the

foreclosure proceedings are correctly performed by attorneys.

Best Place, Inc., 82 Hawai?i at 127, 920 P.2d at 341. The

interests of the mortgagor are thus protected.

In sum, we conclude that recognizing a cause of action

based upon former HRS § 667-5 is not warranted. Because former

HRS §§ 667-5 and 667-7 are in pari materia, inasmuch as they

both discuss the notice of intention of foreclosure, we read the

two statutes together. See HRS § 1-16 (2009) (“Laws in pari

materia, or upon the same subject matter, shall be construed

with reference to each other.”). Accordingly, for the same

reasons Hungate cannot assert a cause of action against Rosen

under HRS § 667-5, he cannot assert a claim under HRS § 667-7.

Hungate also makes a contract-based argument that

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Rosen was required to adhere to the mortgage’s power of sale

clause because former HRS § 667-5(a)(2) states that the attorney

shall “[g]ive any notices and do all acts as are authorized or

required by the power [of sale] contained in the mortgage.”

However, Hungate’s ability to make this contract-based claim

ultimately relies upon the availability of a cause of action

under former HRS § 667-5. As discussed supra, Hungate cannot

assert a viable cause of action against Rosen under HRS § 667-5;

thus, his contract-based claim does not stand.

B. Deutsche Bank Must Use Reasonable Means to Obtain the Best
Price for a Foreclosed Property

In addition to Hungate’s allegations that Deutsche

Bank and Rosen violated HRS § 667 Part I and the mortgage

contract, Hungate asserts that Deutsche Bank violated common law

duties established in Silva and Ulrich v. Sec. Inv. Co., 35 Haw.

158 (Haw. Terr. 1939). Quoting Ulrich, Hungate contends that

failing to give proper notice under former HRS § 667-7(a)(2) and

failing to publish postponement announcements as required by the

mortgage’s power of sale clause constituted violations of the

common law duty to “use all fair and reasonable means in

obtaining the best prices for the property on sale[.]” Ulrich,

35 Haw. at 168. We agree. In reaching this conclusion, we

first discuss the duty owed by mortgagees under Ulrich. We then

address the burden of the mortgagee who purchases the foreclosed

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property to demonstrate that the foreclosure sale was “regularly

and fairly conducted” and that “an adequate price” was paid by

the mortgagee. Ulrich, 35 Haw. at 168.

1. Deutsche Bank Owes a Common Law Duty to Hungate

We recently reaffirmed Ulrich and recognized that this

common law duty extends to mortgagees conducting non-judicial

foreclosure sales of real property. See Kondaur Capital Corp.

v. Matsuyoshi, 136 Hawai?i 227, 361 P.3d 454 (2015). At the

time Ulrich was decided, the law did not distinguish between

real property and chattel mortgages;19 accordingly, the court did

not limit Ulrich’s holding to chattel mortgages. See RLH §

19
The statutory provisions governing non-judicial foreclosures when
Ulrich was decided were Revised Laws of Hawai?i (RLH) §§ 4724-4728 (1935).
Ulrich, 35 Haw. at 163. RLH § 4724, the former version of HRS § 667-5,
provided as follows:

Notice of foreclosure; affidavit after sale. When a power
of sale is contained in a mortgage, the mortgagee, or any
person having his estate therein, or authorized by such
power to act in the premises, may, upon a breach of the
condition, give notice of his intention to foreclose the
mortgage, by publication of such notice in the English
language once in each of three successive weeks, the first
publication to be not less than twenty-eight days before
the day of sale, and the last publication to be not less
than fourteen days before the day of sale, in a newspaper
published either in the county in which the mortgaged
property lies, or in Honolulu, and having a circulation in
such county; and also give such notices and do all such
acts as are authorized or required by the power contained
in the mortgage. He shall, within thirty days after
selling the property in pursuance of the power, file a copy
of the notice of sale and his affidavit, setting forth his
acts in the premises fully and particularly, in the bureau
of conveyances, in Honolulu. The affidavit and copy of the
notice shall be recorded by the registrar, with a notice of
reference thereto in the margin of the record of the
mortgage deed, if recorded in his office.

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4724; Kondaur, 136 Hawai?i at 240, 361 P.3d at 467 (analyzing

RLH § 4727); Ulrich, 35 Haw. at 163-68. In Kondaur, we

explained that Ulrich’s rationale, to protect the mortgagor from

being “wrongfully and unfairly taken advantage of by the

mortgagee,” applies with equal force to non-judicial foreclosure

sales of real property. Kondaur, 136 Hawai?i at 240, 361 P.3d

at 467. Mortgagors of both real and personal property therefore

continue to benefit from the protections set forth in Ulrich.

Id. at 240, 361 P.3d at 467. Accordingly, under Kondaur and

Ulrich, in addition to the duties required under the now-

repealed HRS § 667 Part I, a mortgagee has a duty to use “fair

and reasonable means in obtaining the best prices for the

property on sale.” Id. at 235, 361 P.3d at 462 (citing Ulrich,

35 Haw. at 168); see also Silva, 5 Haw. at 265 (requiring the

mortgagee “to use discretion in an intelligent and reasonable

manner, not to oppress the debtor or to sacrifice his estate”).

We further clarify that the mortgagee’s duty to seek

the best price under the circumstances does not require the

mortgagee to obtain the fair market value of the property.

Indeed, “[m]any commentators have observed that the foreclosure

process commonly fails to produce the fair market value for

foreclosed real estate.” Restatement (Third) of Prop.:

Mortgages § 8.3 cmt. a (Am. Law Inst. 1997). There are several

reasons why foreclosure sales fail to attract fair market value

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bids, such as the difficulty in inspecting the subject

properties, technical publication notices, marketable title

concerns, and the lack of a willing seller. Id.; see also First

Bank v. Fischer & Frichtel, Inc., 364 S.W.3d 216, 226 (Mo. 2012)

(en banc) (Teitelman, C.J., dissenting) (stating “‘it is well

known that property, when sold at a forced sale, usually does

not bring its full value’ and, instead, ‘has the potential of

bringing only a fraction of the fair market value’” (citations

omitted)). While final bids on foreclosed property need not

equate to fair market values, the mortgagee nonetheless has a

duty to use fair and reasonable means to conduct the foreclosure

sale in a manner that is conducive to obtaining the best price

under the circumstances.

2. Deutsche Bank Carries the Additional Burden to
Demonstrate a Regular and Fair Sale and an Adequate Sale
Price

In addition to the duty of a mortgagee to use fair and

reasonable means to obtain the best price for the property, a

mortgagee who purchases the foreclosed property has the burden

to show that the sale was “regularly and fairly conducted” and

that “an adequate price” was paid under the circumstances.

Ulrich, 35 Haw. at 168; see also Kondaur, 136 Hawai?i at 241-42,

361 P.3d at 468-69. As we explained in Kondaur, “[i]n instances

where the mortgagee assumes the role of a purchaser in a self-

dealing transaction, the burden is on the mortgagee . . . to

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establish its compliance with these obligations.” Id. at 240,

361 P.3d at 467. This burden properly falls on the mortgagee

because in choosing to conduct the non-judicial foreclosure sale

under HRS § 667 Part I, the mortgagee elects a position superior

to the mortgagor with a duty to treat the mortgagor fairly and

without resorting to the advantage derived from its authority to

conduct the sale.

There is no neutral party, such as a court,

supervising the sale and ensuring a fair and reasonable process.

When the non-judicial foreclosure sale results in the mortgagee

purchasing the property, it is therefore imperative that the

mortgagee establish that this result occurred after a fairly

conducted sale. Id. at 241-43, 361 P.3d at 468-70.

Accordingly, because Deutsche Bank purchased Hungate’s property,

Deutsche Bank has the burden to establish that the sale was

fairly conducted and resulted in an adequate price under the

circumstances. Id. at 240-42, 361 P.3d at 467-69.

C. The Circuit Court Erred in Dismissing Hungate’s Unfair or
Deceptive Acts or Practices Claim Against Deutsche Bank,
but Properly Dismissed Hungate’s Claim Against Rosen

Hungate alleged that Deutsche Bank and Rosen committed

unfair or deceptive acts or practices, in violation of HRS

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§ 480-2,20 by providing less than the statutorily required four

weeks of notice and failing to publish the notice of sale. HRS

§ 480-2(a) provides that “unfair or deceptive acts or practices

in the conduct of any trade or commerce are unlawful.”

HRS § 480-2 contains “broad language in order to

constitute a flexible tool to stop and prevent fraudulent,

unfair or deceptive business practices for the protection of

both consumers and honest business[persons].” Haw. Cmty. Fed.

Credit Union v. Keka, 94 Hawai?i 213, 228, 11 P.3d 1, 16 (2000)

(quoting Ai v. Frank Huff Agency, Ltd., 61 Haw. 607, 616, 607

P.2d 1304, 1311 (1980), overruled on other grounds by Robert’s

Haw. Sch. Bus, Inc. v. Laupahoehoe Transp. Co., 91 Hawai?i 224,

247, 982 P.2d 853, 876 (1999)). “HRS chapter 480’s paramount

purpose was to ‘encourage those who have been victimized by

persons engaging in unfair or deceptive acts or practices to

prosecute their claim’ thereby affording ‘an additional

deterrent to those who would practice unfair and deceptive

business acts.’” Zanakis-Pico v. Cutter Dodge, Inc., 98 Hawai?i

309, 317, 47 P.3d 1222, 1230 (2002) (citations omitted). This

statute “is remedial in nature and must be liberally construed

in order to accomplish the purpose for which it was enacted.”

Keka, 94 Hawai?i at 229, 11 P.3d at 17; see also Compton v.

20
Hungate also alleged an unfair methods of competition claim in
his complaint and first amended complaint, but does not dispute the circuit
court’s dismissal of that claim in his appeal.

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Countrywide Fin. Corp., 761 F.3d 1046, 1052 (9th Cir.

2014)(applying Hawai?i law).

To assert an unfair or deceptive acts or practices

claim pursuant to HRS § 480-2, Hungate must qualify as a

“consumer” and the alleged conduct of Rosen and Deutsche Bank

must involve “trade or commerce.” We address separately

Hungate’s claims against Deutsche Bank and Rosen for unfair and

deceptive acts or practices.

1. Hungate Sufficiently Alleged Deutsche Bank Violated
HRS § 480-2 by Engaging in Unfair or Deceptive Acts
or Practices

As a mortgagor who purchased residential property,

Hungate alleges he qualifies as a consumer under HRS chapter

480. A consumer is a “natural person who, primarily for

personal, family, or household purposes, purchases, attempts to

purchase, or is solicited to purchase goods or services or who

commits money, property, or services in a personal investment.”

HRS § 480-1 (2008). “[I]n the context of consumer debt, the

determination of whether the individual seeking suit is a

‘consumer’ should rest on whether the underlying transaction

which gave rise to the obligation” met the requirements of HRS

§ 480-1. Flores v. Rawlings Co., LLC, 117 Hawai?i 153, 164, 177

P.3d 341, 352 (2008). Here, the underlying transaction involved

committing money in a personal investment pursuant to HRS § 480-

1, namely, purchasing residential property. See Keka, 94

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Hawai?i at 227, 11 P.3d at 15 (citing Cieri v. Leticia Query

Realty, Inc., 80 Hawai?i 54, 69, 905 P.2d 29, 44

(1995))(explaining “real estate or residences qualify as

‘personal investments’”). Further, we have held that an

individual who purchases residential property through acquiring

a loan, i.e., a “loan borrower,” is a “consumer” committing

money in a personal investment within the meaning of HRS § 480-

1. Keka, 94 Hawai?i at 227, 11 P.3d at 15 (citing Cieri, 80

Hawai?i at 69, 905 P.2d at 44). Hungate, as a loan borrower who

purchased residential property, is thus a consumer.

We also conclude Deutsche Bank’s acts occurred in

trade or commerce. Trade or commerce means a “business

context.” Cieri, 80 Hawai?i at 65, 905 P.2d at 40.

Transactions conducted in a business context, “by their very

nature, include transactions conducted by a financial

institution,” such as a “loan extended by a financial

institution[.]” Keka, 94 Hawai?i at 227, 11 P.3d at 15. Thus,

the nature of a non-judicial foreclosure, which results from a

loan transaction, is that of a transaction conducted in the

business context. It is undisputed that Deutsche Bank is a

financial institution regularly engaged in providing loans and

conducting foreclosures. Deutsche Bank’s acts throughout the

foreclosure proceedings therefore occurred in the business

context.

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We next consider whether Hungate alleged sufficient

facts that Deutsche Bank engaged in unfair or deceptive acts.21

“The question of whether a practice constitutes an unfair or

deceptive trade practice is ordinarily a question of fact.”

Balthazar v. Verizon Haw., Inc., 109 Hawai?i 69, 72 n.4, 123

P.3d 194, 197 n.4 (2005) (citation omitted). To determine

sufficiency, we accept the allegations made in Hungate’s

complaints as true and “view them in the light most favorable

to” Hungate. Cayetano, 111 Hawai?i at 476, 143 P.3d at 15.

“[D]ismissal is proper only if it ‘appears beyond doubt that the

plaintiff[s] can prove no set of facts in support of [their]

claim[s] that would entitle [them] to relief.’” Id. (citation

omitted).

A practice “is unfair when it [1] offends established

public policy and [2] when the practice is immoral, unethical,

oppressive, unscrupulous or [3] substantially injurious to

consumers.” Keka, 94 Hawai?i at 228, 11 P.3d at 16 (citation

omitted). Hungate need not allege that Deutsche Bank’s actions

21
The circuit court did not reach the merits of Hungate’s unfair or
deceptive acts or practices claim in its dismissals of the initial complaint
and the first amended complaint. In its dismissal of the initial complaint,
the circuit court found that Hungate did not have standing to assert an
unfair or deceptive acts or practices claim against Rosen, and thus did not
reach the merits of Hungate’s claim. In dismissing the first amended
complaint against Deutsche Bank, the court explained that Hungate’s unfair or
deceptive acts or practices claim was based in part on his allegation that
Deutsche Bank failed to comply with the four-week requirement and failed to
publish notice of the postponements of the foreclosure sale. The court
determined that Hungate did not state a claim as to these issues and did not
further address Hungate’s unfair or deceptive acts or practices claim.

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meet all three of these factors to assert an unfair act or

practice. See id. at 229, 11 P.3d at 17 (determining that the

conduct in question was “unethical, oppressive, unscrupulous and

substantially injurious to consumers,” but not addressing

whether the conduct offended public policy); Kapunakea Partners

v. Equilon Enters. LLC, 679 F. Supp. 2d 1203, 1210 (D. Haw.

2009)(analogizing the three factors as applied to federal

antitrust laws to application of HRS § 480-2 to determine “[a]

practice may be unfair because of the degree to which it meets

one of the criteria or because to a lesser extent it meets all

three” (citation omitted)).

A practice may be unfair if it “offends public policy

as it has been established by statutes, the common law, or

otherwise[.]” Kapunakea Partners, 679 F. Supp. 2d at 1210

(citing FTC v. Sperry & Hutchinson, 405 U.S. 233, 244 n.5

(1972)). Hungate claims Deutsche Bank’s conduct offended public

policy because Rosen’s actions, on behalf of Deutsche Bank,

violated HRS § 667 Part I, as discussed supra. Deutsche Bank

also bore a common law duty to “use all fair and reasonable

means in obtaining the best prices for the property on sale[.]”

Kondaur, 136 Hawai?i at 235, 361 P.3d at 462 (citing Ulrich, 35

Haw. at 168); see also U.S. Bank Nat’l Ass’n v. Castro, 131

Hawai?i 28, 39, 313 P.3d 717, 728 (2013)(recognizing that a

purpose of non-judicial foreclosure statutes is to “protect the

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debtor from a wrongful loss of property” (citation omitted));

Hoge v. Kane, 4 Haw. App. 533, 540, 670 P.2d 36, 40 (1983)

(discouraging any action that “prevents a free, fair, and open

[judicial foreclosure] sale or [that] chills the sale”). A

factfinder could determine Deutsche Bank’s conduct offended

public policy or otherwise met the test for “unfair,” and

therefore Hungate sufficiently alleged that Deutsche Bank

engaged in unfair acts or practices.

Hungate also alleged that Deutsche Bank conducted the

non-judicial foreclosure deceptively. A deceptive act or

practice is “(1) a representation, omission, or practice[] that

(2) is likely to mislead consumers acting reasonably under the

circumstances [where] (3)[] the representation, omission, or

practice is material.” Courbat v. Dahana Ranch, Inc., 111

Hawai?i 254, 262, 141 P.3d 427, 435 (2006) (citation omitted).

A representation, omission, or practice is material if it

“involves ‘information that is important to consumers and,

hence, likely to affect their choice of, or conduct regarding, a

product.’” Id. (citation omitted). The test to determine

deceptiveness “is an objective one, turning on whether the act

or omission ‘is likely to mislead consumers,’ . . . as to

information ‘important to consumers’ . . . in making a decision

regarding the product or service.” Id. (citations omitted).

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“[P]roof of actual deception is unnecessary.” Rosa v. Johnston,

3 Haw. App. 420, 427, 651 P.2d 1228, 1234 (1982).

The same conduct that Hungate alleges to be unfair may

also be considered to be deceptive. Hungate contends Rosen’s

practice, on behalf of Deutsche Bank, of conducting foreclosure

sales on the 28th rather than 29th day from the date of first

publication and failing to publish postponements of the sale

date was likely to mislead reasonable consumers and could reduce

buyer interest. Such practices could render potential buyers

less able to determine whether the property was available for

sale and less able to obtain important information regarding the

property. As the United States Court of Appeals for the Ninth

Circuit explained, “[p]roper notice of the actual date of a

foreclosure auction is essential to ensure that foreclosed

properties bring adequate prices and that the public has an

appropriate opportunity to bid.” Kekauoha-Alisa v. Ameriquest

Mortg. Co. (In re Kekauoha-Alisa), 674 F.3d 1083, 1091 (9th Cir.

2012). Although Kekauoha-Alisa presented a stronger case in

which no public announcement of the sale was provided at all,

the failure to publish the postponement of a foreclosure sale

could mislead consumers. Thus, a factfinder could determine

Rosen’s scheduling of a foreclosure sale too early and failure

to publish postponement notices, while acting on Deutsche Bank’s

behalf, were deceptive acts.

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In addition to adequately alleging sufficient facts

that Deutsche Bank’s conduct were unfair or deceptive pursuant

to HRS § 480-2, Hungate was also required to allege sufficient

facts to show he was injured. See HRS § 480-13. “[T]he mere

existence of a violation is not sufficient ipso facto to support

the action; forbidden acts cannot be relevant unless they cause

private damage.” Ai, 61 Haw. at 618, 607 P.2d at 1312

(overruled on other ground by Robert’s, 91 Hawai?i at 247, 982

P.2d at 876). HRS chapter 480 does not define injury or

damages, but “Hawai?i courts have not set a high bar for

proving” injury. Compton, 761 F.3d at 1053. Hungate need only

allege that “he has, as a ‘direct and proximate result’ of

[Deutsche Bank’s] violation [of section 480-2], ‘sustained

special and general damages’ . . . to withstand a motion to

dismiss.” Id. at 1054 (citations omitted). Based on the

allegations in the complaints, the factfinder could determine

Hungate was injured by the foreclosure sale, which eliminated

equity that Hungate held in the property and prevented him from

using the property.

Accordingly, we hold that Hungate sufficiently alleged

claims of unfair and deceptive acts or practices under HRS

§ 480-2 against Deutsche Bank, and the circuit court erred in

dismissing Hungate’s unfair or deceptive acts or practices claim

against Deutsche Bank.

40
____*** FOR PUBLICATION IN WEST’S HAWAI?I REPORTS AND PACIFIC REPORTER ***____

2. Under the Circumstances, Hungate Cannot Claim Unfair
or Deceptive Acts or Practices by Rosen

Hungate also argues that he has standing as a consumer

to assert an unfair or deceptive acts or practices claim against

Rosen. Rosen maintains that the circuit court properly

dismissed Hungate’s unfair or deceptive acts or practices claim

because Hungate was not a consumer of Rosen’s services. We

rejected a similar contention in Flores. In Flores, the

plaintiffs brought an unfair or deceptive acts or practices

claim against a collection agency that provided subrogation and

claims recovery services to the Hawai?i Medical Services

Association (HMSA) based on actions conducted in regards to a

loan agreement between plaintiffs and HMSA. Flores, 117 Hawai?i

at 155-57, 177 P.3d at 343-45. Citing the statute’s definition

of “consumer,” the collection agency argued that the plaintiffs

were not consumers because the plaintiffs did not purchase,

attempt to purchase, or solicit to purchase goods or services

from the agency. Id. at 163, 177 P.3d at 351; see HRS 480-1.

We disagreed with the agency’s argument, and held that “the

statutory structure of HRS chapter 480 does not require that one

be a ‘consumer’ of the defendant’s goods or services, but merely

a ‘consumer.’” Id. at 164, 177 P.3d at 352. A plaintiff

“establishes his standing as a consumer in terms of his

relationship to a transaction, not by a contractual relationship

41
____*** FOR PUBLICATION IN WEST’S HAWAI?I REPORTS AND PACIFIC REPORTER ***____

with the defendant.” Id. Therefore, the “only requirement” is

that the consumer’s commitment of money, property, or services

in a personal investment forms the basis of his complaint. Id.

at 164-65, 177 P.3d at 352-53. As Hungate asserts, he is a

consumer based on the mortgage with Deutsche Bank, and is thus

also a “consumer vis-à-vis the mortgagee’s lawyer for the same

transaction.”

Additionally, Hungate argues that Rosen acted as an

agent for Deutsche Bank in conducting the foreclosure, and thus

should be similarly held liable under the UDAP statute. Hungate

cites Cieri v. Leticia Query Realty, Inc., 80 Hawai?i 54, 65,

905 P.2d 29, 40 (1995), to show that an agent or broker in a

real estate transaction can be sued for UDAP under HRS § 480-2.

However, the unique nature of the attorney-client relationship

warrants distinguishing the role of broker and attorney for

purposes of this case. Sellers and purchasers of real estate

often “utilize and rely on brokers for their expertise and

resources, including access to data in locating properties as

well as determining pricing of ‘comparables’ as a basis for

negotiations.” Cieri, 80 Hawai?i at 65, 905 P.2d at 40. Hence,

the role of a broker is to provide clients with expertise and

resources in real estate transactions.

In contrast, the role of an attorney involves

representing a client’s interests against those of an opposing

42
____*** FOR PUBLICATION IN WEST’S HAWAI?I REPORTS AND PACIFIC REPORTER ***____

party within an adversary system. Attorneys bear a duty to

zealously represent clients “within the bounds of the law.”

Giuliani v. Chuck, 1 Haw. App. 379, 384, 620 P.2d 733, 737

(1980); see also Hawai?i Rules of Professional Conduct,

“Preamble,” ¶ 2; ¶ 8; ¶ 9.22 In other settings, we have declined

to recognize a duty in favor of a plaintiff adversely affected

by an attorney’s performance of legal services on behalf of the

opposing party. In Boning, we noted that “creation of a duty in

favor of an adversary of the attorney’s client would create an

unacceptable conflict of interest. Not only would the

adversary’s interests interfere with the client’s interests, the

attorney’s justifiable concern with being sued for negligence

would detrimentally interfere with the attorney-client

relationship.” Boning, 114 Hawai?i at 220, 159 P.3d at 832.

Permitting a party to sue his or her opponent’s

attorney for UDAP under HRS § 480-2 in foreclosure actions

presents a similar issue in that an attorney’s concern with

being sued by a party opponent could compromise his or her

representation of the client. In a UDAP action, an attorney

would be especially vulnerable to suit because, for example,

under HRS § 480-2 “actual deception need not be shown; the

22
Our desire to avoid creating unacceptable conflicts of interest
in this context, to protect attorney-client counsel and advice from the
intrusion of competing concerns, and to allow adequate room for zealous
advocacy, does not encompass, for example, allowing attorneys to conduct
patently illegal activities on behalf of clients.

43
____*** FOR PUBLICATION IN WEST’S HAWAI?I REPORTS AND PACIFIC REPORTER ***____

capacity to deceive is sufficient.” Keka, 94 Hawai?i at 228, 11

P.3d at 16 (emphasis added) (citations omitted). Accordingly, a

plaintiff would need only to allege that opposing counsel has

breached the statutory duty under HRS § 480-2 “not to engage in

unfair or deceptive acts or practices in the conduct of any

trade or commerce . . . in a way that caused private damages[]

in order to state a claim under” HRS chapter 480. Compton, 761

F.3d at 1056. Given that UDAP lacks a more rigorous or precise

state of mind requirement, “even a carefully rendered opinion

could, if incorrect, have the capacity to deceive.” Short, 691

P.2d at 172 (Pearson, J., concurring). The attorney would

therefore “have to insure the correctness of his [or her]

opinions and strategies,” rendering it “virtually impossible for

an attorney to effectively perform the traditional role of legal

counselor.” Id. Similar to the negligence issue in Boning, in

foreclosure actions an attorney’s justifiable concern with being

sued by the opposing party for UDAP could compromise the

attorney’s ability to zealously represent his or her client.

Consequently, based on the allegations against Rosen, we decline

to recognize a UDAP claim against him by Hungate under HRS §

480-2 in the instant foreclosure action.23

23
We do not now decide whether the 2012 amendments to the
foreclosure statute create potential UDAP liability under some circumstances
for attorneys conducting nonjudicial foreclosures. See HRS § 667-60
(2016)(imposing UDAP liability on “any foreclosing mortgagee” for violating a
(continued . . .)

44
____*** FOR PUBLICATION IN WEST’S HAWAI?I REPORTS AND PACIFIC REPORTER ***____

Accordingly, the circuit court properly dismissed

Hungate’s complaint alleging Rosen violated HRS § 480-2 by

engaging in unfair or deceptive acts or practices.

IV. Conclusion

For the foregoing reasons, we vacate in part the

circuit court’s November 5, 2013 order granting Rosen’s motion

to dismiss, and vacate in part the circuit court’s April 8, 2014

order granting Deutsche Bank’s motion to dismiss, and remand to

the circuit court for proceedings consistent herewith.

James J. Bickerton, /s/ Mark E. Recktenwald
John Francis
Perkin, Stanley K. /s/ Paula A. Nakayama
Roehrig
for appellant /s/ Sabrina S. McKenna

Christopher T. /s/ Richard W. Pollack
Goodin, David B.
Rosen, Peter W. /s/ Michael D. Wilson
Olsen
for appellee Rosen

Judy A. Tanaka
for appellee
Deutsche Bank

(. . . continued)
series of provisions governing nonjudicial foreclosure); HRS § 667-1
(2016)(defining “mortgagee” to include “the current mortgagee’s or lender’s
duly authorized agent”).

45

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More Wells Fargo customers may be affected by sales scandal: filing

More Wells Fargo customers may be affected by sales scandal: filing

Imagine this – the number of affected people far worse and the years of the search now go back to 2009 – same timing as foreclosure fraud. 

Reuters-

More Wells Fargo & Co (WFC.N) customers may have been affected by a scandal over phony accounts than previously believed, the third-largest U.S. lender said in a regulatory filing on Wednesday.

Wells Fargo had previously estimated that up to 2.1 million customers may have had checking and credit-card accounts opened in their names without their permission over a period of several years.

As part of an expanded review there could be “an increase in the identified number of potentially impacted customers,” Wells said.

[REUTERS]

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Fannie And Freddie: Mnuchin Reveals New Clues

Fannie And Freddie: Mnuchin Reveals New Clues

Seeking Alpha-

Summary

  • Treasury Secretary Steven Mnuchin made several comments about Fannie and Freddie on Thursday morning.
  • Though recap and release may not happen until late summer, early fall, we continue to believe it is the likely scenario.
  • Mnuchin’s comments about liquidity in the 30 year mortgage market and getting Fannie and Freddie out of government control were bullish for the long term.

By Parke Shall with Thom Lachenmann

We think that new revelations made by Steven Mnuchin and missed by most of the financial analysts reveal new clues to the future of Fannie (OTCQB:FNMA) and Freddie (OTCQB:FMCC). We think comments he made last week in interviews not only confirm that Fannie and Freddie won’t be under government control much longer, but also that it could still be a couple of months before action takes place. Until then, we expect to see an appeal of last week’s court decision; a decision that came with some scathing dissent despite not falling in favor of shareholders (for the most part).

[SEEKING ALPHA]

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Bank of America, NA v. REYES-TOLEDO | HI Supreme Court –  there is a genuine issue of material fact as to whether Bank of America held the Note at the time it filed the complaint …  erred in dismissing Homeowner’s counterclaims

Bank of America, NA v. REYES-TOLEDO | HI Supreme Court – there is a genuine issue of material fact as to whether Bank of America held the Note at the time it filed the complaint … erred in dismissing Homeowner’s counterclaims

h/t Dubin Law Offices

IN THE SUPREME COURT OF THE STATE OF HAWAI?I
—o0o—

BANK OF AMERICA, N.A., SUCCESSOR BY MERGER TO BAC HOME LOANS
SERVICING, LP FKA COUNTRYWIDE HOME LOANS SERVICING LP,
Respondent/Plaintiff-Appellee,

vs.

GRISEL REYES-TOLEDO,
Petitioner/Defendant-Appellant,

and

WAI KALOI AT MAKAKILO COMMUNITY ASSOCIATION;
MAKAKILO COMMUNITY ASSOCIATION; and
PALEHUA COMMUNITY ASSOCIATION,
Respondents/Defendants-Appellees.

SCWC-15-0000005

CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS
(CAAP-15-0000005; CIVIL NO. 12-1-0668)

FEBRUARY 28, 2017

NAKAYAMA, ACTING C.J., McKENNA, POLLACK, AND WILSON, JJ., AND CIRCUIT
COURT JUDGE GARIBALDI, IN PLACE OF RECKTENWALD, C.J., RECUSED
OPINION OF THE COURT BY POLLACK, J.

This case raises issues of standing and appellate
jurisdiction that pertain to foreclosure proceedings. We
consider whether a foreclosing plaintiff seeking summary
judgment must prove it had standing to foreclose on the
homeowner’s property at the commencement of the lawsuit to be
entitled to foreclosure of the subject property. We also
determine the extent of appellate jurisdiction over
interlocutory orders leading up to a foreclosure decree.

[…]

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Senate Adds Another Foreclosure Kingpin To Trump’s Cabinet

Senate Adds Another Foreclosure Kingpin To Trump’s Cabinet

Huffington Post-

The first, Steven Mnuchin, Trump’s treasury secretary, invested in and ran OneWest bank, which foreclosed on tens of thousands of Americans in the aftermath of the 2008 financial crisis. During his Senate confirmation hearing, he denied that his bank used the illegal practice of robo-signing, but public documents obtained by The Columbus Dispatch showed that was a false statement.

Ross may not have been the CEO of a bank foreclosing on homeowners, but he was nevertheless intimately involved and invested in two companies that were accused of widespread wrongdoing. American Home Mortgage Servicing was accused of illegal foreclosure practices while it ran the second-biggest portfolio of subprime mortgages in the country.

American Home effectively outsourced the fraud, David Dayen reported, using “a company called DocX, which forged millions of mortgage assignments, claiming to be the officers of dozens of different banks … documents were fraudulently signed after the fact to recreate a chain of title that lenders broke.” The company was eventually sold to Ocwen, which was fined $2.1 billion in 2013 for its unethical business practices. Ross served on Ocwen’s board from 2012 to 2014.

[HUFFINGTONPOST]

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Jacobs v. Federal National Mortgage Association (Fannie Mae) | FL 2DCA – concedes that it failed to establish standing at the time the original plaintiff, JP Morgan Chase Bank, N.A., filed the complaint

Jacobs v. Federal National Mortgage Association (Fannie Mae) | FL 2DCA – concedes that it failed to establish standing at the time the original plaintiff, JP Morgan Chase Bank, N.A., filed the complaint

 

EDGAR R. JACOBS and 4721 WESTWOOD DRIVE TRUST, Gulf Coast Home Sites, Inc. as Trustee, Dated November 22, 2002, Appellants,
v.
FEDERAL NATIONAL MORTGAGE ASSOCIATION, Appellee.

Case No. 2D15-4918.
District Court of Appeal of Florida, Second District.
Opinion filed February 22, 2017.
Appeal from the Circuit Court for Charlotte County; Michael T. McHugh, Judge.

Eric J. Chrisner, David C. Hicks, and Vincent Carl LoBue of Alliance Legal Group, PL, Sarasota, for Appellants.

Wm. David Newman, Jr. of Choice Legal Group, P.A., Fort Lauderdale, for Appellee.

BLACK, Judge.

In this appeal from a final judgment of foreclosure, Federal National Mortgage Association appropriately concedes that it failed to establish standing at the time the original plaintiff, JP Morgan Chase Bank, N.A., filed the complaint. As a result, we reverse and remand for dismissal of the foreclosure action. See Segall v. Wachovia Bank, N.A., 192 So. 3d 1241, 1245-46 (Fla. 4th DCA 2016); Fiorito v. JP Morgan Chase Bank, Nat’l Ass’n, 174 So. 3d 519, 521-22 (Fla. 4th DCA 2015).

Reversed and remanded.

KELLY and BADALAMENTI, JJ., Concur.

NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING MOTION AND, IF FILED, DETERMINED.

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Bishop v. Wells Fargo & Co., et al. | Score One for the Bank Whistle-Blowers

Bishop v. Wells Fargo & Co., et al. | Score One for the Bank Whistle-Blowers

NYT-

Here is something to celebrate: The United States Supreme Court just handed whistle-blowers one of their bigger wins in a long time.

People who expose wrongdoing in the workplace or among government contractors have taken a beating in recent years. The Obama Administration was especially assiduous in its pursuit of whistle-blowers, and President Trump has also singled them out for scorn.

So it was gratifying to see the Feb. 21 ruling from the nation’s top court on an important bank whistle-blower case dating back to the financial crisis. In its opinion, which vacated two lower courts’ dismissals of the case, the Supreme Court essentially confirmed that some courts have been using too narrow a legal standard when weighing whistle-blower suits under the False Claims Act, which is meant to punish those who defraud the government.

By highlighting a more expansive standard for what constitutes a false claim under …

[NEW YORK TIMES]

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TFH 2/26 |  The Coming Public Pension Meltdown: How Fannie Mae and Freddie Mac Were Used To Steal Public Pension Funds, Where Did All the Money Go, Who Has Been Covering Up the Theft, and How Every Homeowner Has Been and Will Be Further Harmed by One of the Biggest Yet Still Largely Concealed Financial Ripoffs in American History

TFH 2/26 | The Coming Public Pension Meltdown: How Fannie Mae and Freddie Mac Were Used To Steal Public Pension Funds, Where Did All the Money Go, Who Has Been Covering Up the Theft, and How Every Homeowner Has Been and Will Be Further Harmed by One of the Biggest Yet Still Largely Concealed Financial Ripoffs in American History

COMING TO YOU LIVE DIRECTLY FROM THE DUBIN LAW OFFICES AT HARBOR COURT, DOWNTOWN HONOLULU, HAWAII

LISTEN TO KHVH-AM (830 ON THE AM RADIO DIAL)

ALSO AVAILABLE ON KHVH-AM ON THE iHEART APP ON THE INTERNET

.

.

Sunday –  February 26

The Coming Public Pension Meltdown: How Fannie Mae and Freddie Mac Were Used To Steal Public Pension Funds, Where Did All the Money Go, Who Has Been Covering Up the Theft, and How Every Homeowner Has Been and Will Be Further Harmed by One of the Biggest Yet Still Largely Concealed Financial Ripoffs in American History
———————

We all know the devastating effects that the 2008 mortgage crisis has had on the American economy generally and tens of millions of homeowners personally and their families in the United States, while Pontius Pilate-like, federal and state judges and legislators have mostly looked the other way.

We are now faced with a yet even bigger, approaching financial disaster that this Nation’s local and state governments are equally unprepared for: the coming public pension meltdown that the federal government this time lacks the otherwise needed huge financial resources to adequately deal with.

Cities like Detroit have already had to file bankruptcy due to unfunded public pensions, and Chicago, Dallas, El Paso, Houston as well as other American cities, along with States like Arizona, Hawaii, Illinois, and Nevada are said to potentially be next — all at risk due to unfunded public pensions affecting tens of millions of their retirees and their residents dependent on public services.

What is little known is that behind this next crisis in large part once again have been Fannie Mae and Freddie Mac — twin Frankenstein monsters as it were — created, fed, and shielded by self-dealing federal politicians.

On this Sunday’s show we will explore the hidden role that both Fannie Mae and Freddie Mac have played in bankrupting America’s public pensions and will suggest where the stolen funds went.

As public pension deficits increase, the financial strain upon homeowners and other taxpayers and everyone dependent on public services, whether in foreclosure or not, will also increase.

Knowing how the public pension crisis arose and why Fannie Mae and Freddie Mac, the controlling entities furthermore behind MERS as well, are largely responsible for it, is knowledge essential in any effort to deal with it.

Our special guest this Sunday will be Virginia Parsons, who has devoted years researching the coming public pension crisis and who will for the first time share her unique findings with us.

If you are a homeowner paying property taxes and dependent on government services and/or have or are earning a government pension, you cannot afford to miss this show.

~

.
Host: Gary Dubin Co-Host: John Waihee

.

CALL IN AT (808) 521-8383 OR TOLL FREE (888) 565-8383

Have your questions answered on the air.

Submit questions to info@foreclosurehour.com

The Foreclosure Hour is a public service of the Dubin Law Offices

Past Broadcasts

EVERY SUNDAY
3:00 PM HAWAII
5:00 PM PACIFIC
8:00 PM EASTERN
ON KHVH-AM
(830 ON THE DIAL)
AND ON
iHEART RADIO

The Foreclosure Hour 12

 

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Foreclosed and Sold An Examination of Community and Property Characteristics Related to the Sale of REO Properties

Foreclosed and Sold An Examination of Community and Property Characteristics Related to the Sale of REO Properties

Foreclosed and Sold

An Examination of Community and Property Characteristics Related to the Sale of REO Properties

Foreclosure affects not only the foreclosing homeowner but also the surrounding residential neighborhood. Prior work has found that the negative neighborhood impacts of foreclosed properties that remain as real-estate-owned (REO) properties persist until the property is resold. Furthermore, negative neighborhood price externalities are more substantial the longer a home spends in REO stock. This article used foreclosure data from Dallas County, Texas, to examine how both housing and neighborhood characteristics are related to the possibility of the sale of a foreclosed property out of REO stock. The findings from the Cox proportional hazard model indicate that homes in low-income minority neighborhoods and homes with property characteristics associated with a need for more preventative maintenance were slower to sell. Results have the potential to provide insight into how housing and neighborhood characteristics might help to explain part of the uneven geographic distribution of foreclosure impacts following the 2007–2009 financial recession.

PDF download for Foreclosed and Sold

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PERRY CAPITAL LLC v STEVEN T. MNUCHIN | Fannie Mae, Freddie Mac shares plunge after court’s ruling

PERRY CAPITAL LLC v STEVEN T. MNUCHIN | Fannie Mae, Freddie Mac shares plunge after court’s ruling

WAPO-

Fannie Mae and Freddie Mac shares plunged Tuesday after a federal appeals court denied legal claims by investors who were seeking to stop the U.S. government from seizing the profits of the mortgage giants.

Fannie shares sank 35 percent to $2.71. Freddie shares tumbled 38 percent to $2.47.

Hopes for reform of the government-sponsored enterprises had lifted shares of Fannie and Freddie following President Trump’s election. Shares of Fannie went from a low of $1.26 to a high of $5.00, only to retreat after Tuesday’s ruling.

[WASHINGTON POST]

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Wells Fargo Board Fires 4 Managers In Bogus Accounts Probe

Wells Fargo Board Fires 4 Managers In Bogus Accounts Probe

Law360-

Wells Fargo’s board of directors has voted to fire four senior managers in connection with an ongoing investigation stemming from last year’s scandal over 1.5 million phony bank accounts opened in customers’ names, the bank announced Tuesday.
The bank issued a press release announcing that the board voted unanimously to terminate the employees as part of its independent investigation “into the company’s retail banking sales practices and related matters.”

The employees are Claudia Russ Anderson, former community bank chief risk officer; Pamela Conboy, Arizona lead regional president; Shelley Freeman, former Los Angeles regional president and head of consumer credit solutions; and Matthew Raphaelson, head of community bank strategy and initiatives.

Each of the four employees will forfeit their unvested equity awards and vested outstanding options, the press release said. None will receive a 2016 bonus.

[LAW 360]

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Supreme Court breathes new life into whistleblower case against Wells Fargo

Supreme Court breathes new life into whistleblower case against Wells Fargo

The Charlotte Observer –

With a ruling Tuesday, the U.S. Supreme Court revived a long-running whistleblower lawsuit that accused Wachovia’s investment bank of violating accounting rules and skirting internal controls to pursue short-term profits.

The Supreme Court vacated a judgment in August 2016 by the U.S. Appeals Court for the Second Circuit that had affirmed a lower court’s decision to dismiss the case filed by two whistleblowers, including one who had worked in Charlotte.

The high court ordered the appeals court to give the case further consideration in light of a June 2016 Supreme Court ruling that interpreted an aspect of the federal whistleblower law called the U.S. False Claims Act.

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Uribe v. CARRINGTON MORTGAGE SERVICES, LLC | TX 4DCA – …”the appellee to establish its right to foreclose was forged and therefore void, the trial court erred in granting the appellee’s motion for summary judgment”

Uribe v. CARRINGTON MORTGAGE SERVICES, LLC | TX 4DCA – …”the appellee to establish its right to foreclose was forged and therefore void, the trial court erred in granting the appellee’s motion for summary judgment”

Maria Jilma URIBE and Jose Carlos Uribe, Appellants,
v.
CARRINGTON MORTGAGE SERVICES, LLC on behalf of Wells Fargo Bank NA, as Trustee for Carrington Mortgage Loan Trust, Series 2006-NC4 Asset Backed Pass Through Certificates, Appellee.

No. 04-16-00060-CV.
Court of Appeals of Texas, Fourth District, San Antonio.

Delivered and Filed: February 15, 2017.
David Kirkendall, for Jose Carlos Uribe, Appellant.

David Kirkendall, for Maria Jilma Uribe, Appellant.

Jonathan M. Williams, for Carrington Mortgage Services, LLC, Appellee.

Jonathan M. Williams, for Marinosci Law Group P.C., Appellee.

Jonathan M. Williams, for New Century Mortgage Corporation, Appellee.

Jonathan M. Williams, for Wells Fargo Bank, N.A. as Trustee for Carrington Mortgage Loan Trust Series 2006-NC4 Asset Backed Pass through Certificates, Appellee.

Appeal from the 73rd Judicial District Court, Bexar County, Texas, Trial Court No. 2014CI18492, Honorable Dick Alcala, Judge Presiding.

REVERSED AND REMANDED.

Sitting: Sandee Bryan Marion, Chief Justice, Karen Angelini, Justice, Irene Rios, Justice.

MEMORANDUM OPINION

KAREN ANGELINI, Justice.

Maria Jilma Uribe and Jose Carlos Uribe appeal a summary judgment granted in favor of Carrington Mortgage Services, LLC on behalf of Wells Fargo Bank NA, as Trustee for Carrington Mortgage Loan Trust, Series 2006-NC4 Asset Backed Pass Through Certificates (the “Trust”). In their brief, the Uribes contend the trial court erred in granting the summary judgment because: (1) the summary judgment evidence fails to conclusively establish the Trust was the owner and holder of the Texas Home Equity Note and Texas Home Equity Security Instrument[1] executed by the Uribes or what entity owned the note and security instrument prior to the assignment to the Trust; (2) the assignment of the note and security instrument to the Trust occurred after the Trust’s closing date; and (3) the summary judgment evidence raised a genuine issue of material fact with regard to whether Mr. Uribe’s signature on the security instrument was forged. The Uribes also contend the appellee’s motion for summary judgment did not address their fraud claim, and the trial court erred in overruling their motion for continuance. We reverse the trial court’s judgment and remand the cause for further proceedings.

BACKGROUND

On November 25, 2014, the Uribes filed the underlying lawsuit to prevent the appellee from foreclosing on their home. The appellee obtained an order allowing the foreclosure in a separate lawsuit. In their petition, the Uribes alleged the appellee failed to produce a valid chain of title showing the transfer of the note and security instrument to the Trust. The Uribes also alleged the appellee committed fraud by filing fraudulent documents in the deed records.

On August 13, 2015, the appellee moved for summary judgment asserting it was entitled to proceed with its non-judicial foreclosure as a matter of law. As evidence to support its motion, the appellee attached the note, the security instrument, the assignment of the note and security instrument, and a limited power of attorney.

On October 12, 2015, the Uribes filed a response again challenging the chain of title and asserting Mr. Uribe’s signature on the security instrument was forged. Mr. Uribe’s affidavit was attached to the response. In his affidavit, Mr. Uribe states, “Moreover, after reviewing my alleged signature on the Security Agreement, I am sure it is not mine and that someone forged my signature upon this instrument.”

On November 19, 2015, the Uribes filed a motion to compel production of documents, asserting they served a request for production on the appellee on September 25, 2015. The motion further asserted the appellee refused to produce any documents other than those attached to its motion for summary judgment which was set for a hearing on November 20, 2015. The Uribes also filed a motion for continuance seeking to continue the hearing on the motion for summary judgment until their motion to compel was heard and the appellee produced the requested documents.

On November 20, 2015, the trial court held a hearing. At the hearing, the trial court denied the motion for continuance, noting the Uribes had not requested any discovery until ten months after their lawsuit was filed. At the conclusion of the hearing, the trial court signed a final judgment granting the appellee’s motion. The Uribes appeal.

SUMMARY JUDGMENT STANDARD OF REVIEW

We review a trial court’s granting of a summary judgment de novo. Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005). To prevail on a traditional motion for summary judgment, the movant must show “there is no genuine issue as to any material fact and the [movant] is entitled to judgment as a matter of law.” TEX. R. CIV. P. 166a(c); see also Diversicare Gen. Partner, Inc. v. Rubio, 185 S.W.3d 842, 846 (Tex. 2005). In reviewing a summary judgment, we take as true all evidence favorable to the non-movant, indulging every reasonable inference and resolving any doubts in the non-movant’s favor. Joe v. Two Thirty Nine Joint Venture, 145 S.W.3d 150, 157 (Tex. 2004).

DENIAL OF MOTION FOR CONTINUANCE

The Uribes contend the trial court erred in denying their motion for continuance because the appellee had failed to provide the documents requested in their request for production.

The trial court may order a continuance of a summary judgment hearing if it appears “from the affidavits of a party opposing the motion that he cannot for reasons stated present by affidavit facts essential to justify his opposition.” TEX. R. CIV. P. 166a(g). “When reviewing a trial court’s order denying a motion for continuance, we consider whether the trial court committed a clear abuse of discretion on a case-by-case basis.” Joe, 145 S.W.3d at 161. “A trial court abuses its discretion when it reaches a decision so arbitrary and unreasonable as to amount to a clear and prejudicial error of law.” Id. The following nonexclusive factors are considered in deciding whether a trial court abused its discretion in denying a motion for continuance seeking additional time to conduct discovery: (1) the length of time the case has been on file; (2) the materiality and purpose of the discovery sought; and (3) whether the party seeking the continuance has exercised due diligence to obtain the discovery sought. Id.

In this case, the Uribes’ lawsuit had been on file for almost a year when the trial court heard the motion for summary judgment. The Uribes waited almost ten months before they sent their first discovery request, and that discovery request was sent only after the appellee filed its motion for summary judgment. The Uribes did not file their motion to compel the appellee’s response to that discovery request until the day before the hearing on the appellee’s motion. Based on the foregoing, we hold the trial court did not clearly abuse its discretion in denying the Uribes’ motion for continuance.

CHAIN OF TITLE AND CHALLENGES TO ASSIGNMENT

In several issues, the Uribes challenge the summary judgment on the basis that the summary judgment evidence did not properly establish the Trust’s status as the owner and holder of the note and security instrument. Although the Uribes contend the business records affidavit attached to the appellee’s motion contains conclusory statements, the Uribes do not challenge the trial court’s consideration of the documents attached to that affidavit.

The note and security instrument executed by the Uribes state the lender is New Century Mortgage Corporation. The summary judgment evidence contains an assignment from New Century Mortgage Corporation, as assignor, to Wells Fargo Bank NA as Trustee for Carrington Mortgage Loan Trust, Series 2006-NC4 Asset Backed Pass Through Certificates, as assignee. Finally, the summary judgment evidence contains a limited power of attorney in which Wells Fargo Bank NA appoints Carrington Mortgage Services, LLC as its attorney-in-fact to take action on its behalf as trustee for Carrington Mortgage Loan Trust, Series 2006-NC4 Asset Backed Pass Through Certificates.

In its effort to challenge this chain of title, the Uribes first challenge the capacity of the individual who executed the assignment, asserting the assignment does not clearly identify one of the entities named in the assignment. Under Texas law, the Uribes only have standing to challenge the assignment on a ground that renders the assignment void. See Vasquez v. Deutsche Bank Nat’l Trust Co., 441 S.W.3d 783, 786-87 (Tex. App.-Houston [1st Dist.] 2014, no pet.); Glass v. Carpenter, 330 S.W.2d 530, 537 (Tex. Civ. App.-San Antonio 1959, writ ref’d n.r.e.); Reinagel v. Deutsche Bank Nat’l Trust Co., 735 F.3d 220, 224-25 (5th Cir. 2013). In this case, the assignment reflects that Elizabeth A. Osterman executed the assignment as a vice president of Carrington Mortgage Services, LLC, which was the attorney in fact for New Century Liquidating Trust as successor-in-interest to New Century Mortgage Corporation. Therefore, the assignment reflects Osterman executed the assignment as an officer for the successor-in-interest to New Century Mortgage Corporation. To the extent Osterman fraudulently purported to execute the assignment as an officer of New Century Mortgage Corporation’s successor-in-interest, this lack of authority makes the assignment voidable, not void. Reinagel, 735 F.3d at 226. Therefore, the Uribes lack standing to challenge the assignment on this basis.

The Uribes next contend the limited power of attorney only purported to apply to mortgages owned by the trusts listed in an attached exhibit. The assignment, however, reflects that the Uribes’ note and security instrument were assigned to Wells Fargo NA as Trustee for Carrington Mortgage Loan Trust, Series 2006-NC4 Asset Backed Pass Through Certificates. One of the trusts listed in the exhibit to the limited power of attorney is the Carrington Mortgage Loan Trust, Series 2006-NC4 Asset Backed Pass Through Certificates. Accordingly, the limited power of attorney establishes that it applied to the Uribes’ note and security instrument.

The Uribes also contend the assignment to the Trust occurred after the closing date of the Trust. Even assuming the assignment violated the terms of the Pooling and Service Agreement pursuant to which the Trust operates, such a violation would not render the assignment void. Id. at 228. Therefore, the Uribes lack standing to challenge the assignment on this basis. Vasquez, 441 S.W.3d at 786-87; Glass, 330 S.W.2d at 537; Reinagel, 735 F.3d at 224-25, 228.

Finally, the Uribes contend the summary judgment evidence fails to establish what entity owned the note and security instrument between the closing date of the Trust and the date of the assignment. As previously noted, the Uribes have no standing to challenge the assignment on the basis that it was executed after the closing date of the Trust. And, the assignment reflects the Uribes’ original lender, New Century Mortgage Corporation, was the assignor. Accordingly, the summary judgment evidence establishes that New Century Mortgage Corporation owned the note and security instrument until it was assigned to Wells Fargo Bank, NA as Trustee for Carrington Mortgage Loan Trust, Series 2006-NC4 Asset Backed Pass Through Certificates.

FRAUD CLAIM

The Uribes contend the trial court erred in granting a final judgment because the appellee’s motion for summary judgment did not address their fraud claim. This contention ignores that the fraud claim is based on the allegation that the Trust was not the owner and holder of the note and security instrument. Because the trial court determined the Trust was the owner and holder of the note and security instrument, the granting of the summary judgment also disposed of the Uribes’ fraud claim.

FORGERY

The final ground on which the Uribes challenge the summary judgment is their contention that Mr. Uribe’s signature on the security instrument was forged. As previously noted, the Uribes attached Mr. Uribe’s affidavit to their response in which he states his signature was forged.

A forged security instrument or deed of trust “is void ab initio, a nullity, and passes no title.” See Yarbrough v. Household Fin. Corp. III, 455 S.W.3d 277, 282 (Tex. App.-Houston [14th Dist.] 2015, no pet.); see also Johnson v. Coppel, No. 01-09-00392-CV, 2012 WL 344757, at *6 (Tex. App.-Houston [1st Dist.] Feb. 2, 2012, no pet.)(mem. op.). Although the appellee asserts Mrs. Uribe did not corroborate Mr. Uribe’s statement regarding his signature being forged, we must view the evidence in the light most favorable to the Uribes and take as true all evidence favorable to them. Joe, 145 S.W.3d at 157. Therefore, we accept the statement made by Mr. Uribe in his affidavit to be true and hold the Uribes raised a genuine issue of material fact with regard to whether Mr. Uribe’s signature was forged, rendering the security instrument void.

In its brief, the appellee asserts the Uribes “provided no credible evidence that the notarization [of] the security agreement was forged with knowledge of or by the public notary that would invalidate the security agreement.” In support of this assertion, the appellee cites the Texas Rules of Evidence and a case holding a deed of trust is admissible as evidence because it is self-authenticating. See TEX. R. EVID. 902(8); Roper v. CitiMortgage, Inc., No. 03-11-00887-CV, 2013 WL 6465637, at *11 (Tex. App.-Austin Nov. 27, 2013, pet. denied). The admissibility of the security instrument as self-authenticating evidence, however, does not conclusively negate Mr. Uribe’s statement that his signature was forged.[2]

CONCLUSION

Because Mr. Uribe’s affidavit raised a genuine issue of material fact as to whether the security instrument relied upon by the appellee to establish its right to foreclose was forged and therefore void, the trial court erred in granting the appellee’s motion for summary judgment. Accordingly, the trial court’s judgment is reversed, and the cause is remanded for further proceedings consistent with this opinion.

[1] The security instrument is equivalent to a deed of trust.

[2] We note that the law provides that “a forged deed may be adopted by the grantor when the grantor subsequently acknowledges the deed,” and “[c]lear and unmistakable proof that either the grantor did not appear before the notary or that the notary practiced some fraud or imposition upon the grantor is necessary to overcome the validity of a certificate of acknowledgment.” 1st Coppell Bank v. Smith, 742 S.W.2d 454, 461 (Tex. App.-Dallas 1987, no writ), overruled on other grounds, Fortune Prod. Co. v. Conoco, Inc., 52 S.W.3d 671, 678 (Tex. 2000). The appellee, however, did not raise this argument or reference this law in its motion for summary judgment. See TEX. R. CIV. P. 166a (“Issues not expressly presented to the trial court . . . shall not be considered on appeal as grounds for reversal.”); McConnell v. Southside Indep. Sch. Dist., 858 S.W.2d 337, 343 (Tex. 1993) (noting “[a]n appellate court cannot read between the lines, infer or glean from the pleadings or the proof any grounds for granting the summary judgment other than those grounds expressly set forth before the trial court [in the motion for summary judgment]”) (internal citations omitted); Roberts v. Sw. Tex. Methodist Hosp., 811 S.W.2d 141, 146 (Tex. App.-San Antonio 1991, writ denied) (noting “[w]hen a motion for summary judgment asserts grounds A and B, it cannot be upheld on grounds C and D, which were not asserted”).

 

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Consumer Financial Protection Bureau v HARBOUR PORTFOLIO ADVISORS, LLC – CFPB Has Authority To Request Seven Years’ Worth Of Foreclosure Documents

Consumer Financial Protection Bureau v HARBOUR PORTFOLIO ADVISORS, LLC – CFPB Has Authority To Request Seven Years’ Worth Of Foreclosure Documents

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION

CONSUMER FINANCIAL PROTECTION
BUREAU,
Petitioner,

v.

HARBOUR PORTFOLIO ADVISORS,
LLC; NATIONAL ASSET ADVISORS, LLC;
and NATIONAL ASSET MORTGAGE,
LLC;
Respondents.

OPINION AND ORDER GRANTING PETITION TO ENFORCE CIVIL INVESTIGATIVE
DEMANDS [1]

On November 29, 2016, Petitioner Consumer Financial Protection Bureau (the
“Bureau”) petitioned this Court to enforce Civil Investigative Demands (“CIDs”) that the
Bureau issued to Respondents on September 8, 2016. (Id.) For the reasons that follow,
the Bureau’s petition is GRANTED.

[…]

C. Undue Burden

Harbour finally argues that, even if the Bureau has the authority to issue the CIDs, the
CID it received should be modified because it is unduly burdensome. (See Dkt. 13, at 22-
24.) Specifically, Harbour contends that the length of coverage (almost seven years of
information) is overbroad and that the production deadlines (30 days) are unreasonable.
(Id.) For the following reasons, the Court finds that the CID is not unduly burdensome.

 

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GARY DUBIN LAW OFFICES FORECLOSURE DEFENSE HAWAII and CALIFORNIA
Kenneth Eric Trent, www.ForeclosureDestroyer.com

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