Caraang v. PNC Mortgage
795 F. Supp. 2d 1098
D. Haw.2011Background
- Plaintiffs Edwin Caraang and Edna Caraang sued Defendants PNC Mortgage, PNC Bank, N.A., PNC Financial Services Group, Inc., National City Mortgage, National City Bank, and E*Trade Bank in Civil No. 10-00594 LEK-BMK in the U.S. District Court for the District of Hawai`i.
- Plaintiffs refinanced their Makawao, Hawaii loan on May 27, 2007, executing a $1,400,000 promissory note and mortgage (and a second loan/mortgage) secured by the Property at 255 Aliiolani Street, Makawao, HI 96768.
- Plaintiffs allege disclosures were incomplete or misrepresented, that they could not compare terms, and that Defendants targeted unsophisticated borrowers, resulting in a loan more favorable to lenders and higher risk of default.
- During the loan life, Defendants allegedly transferred/engineered the Note and Mortgage through multiple entities, creating a contested chain of title and questions about who could foreclose.
- Foreclosure occurred with a Notice of Foreclosure in 2010, the Property was sold, and a new certificate of title (TCT 992,051) issued to PNC Bank, N.A., raising challenges to the foreclosure and entitlements to quiet title.
- Plaintiffs asserted nineteen counts, including HOEPA, RESPA, TILA, fraud, fiduciary duty, unjust enrichment, civil conspiracy, quiet title, BOC regulations, mistake, unconscionability, UDAP, good-faith failure, recoupment, NIED/IIED, Chapter 667 foreclosure violations, FDCPA, and antitrust claims, seeking various forms of relief.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Statutes of limitations for I–III | Caraangs contend disclosures/HOEPA/TILA were timely or tolled. | PNC argues claims time-barred since loan closed 2007 and foreclosure completed; alternatives unpersuasive. | Counts I–III dismissed with prejudice as time-barred |
| Fraudulent misrepresentation specificity | Plaintiffs plead general misrepresentation; may amend to specify defendants and acts. | Counts lack Rule 9(b) particularity; insufficient time/place/core content attributed to PNC. | Count IV dismissed without prejudice; can amend to cure defects |
| Breach of fiduciary duty and UDAP viability | Borrower-lender special relationship and UDAP claims supported by alleged misrepresentations and unfair practices. | Lenders owe no fiduciary duty absent special circumstances; UDAP claims preempted or lack specific acts. | Count V dismissed without prejudice; Count XII partially allowed with preemption caveat; remaining UDAP aspects dismissed without prejudice |
| Unconscionability and misdeeds before/around foreclosure | Terms were unconscionable and pre-contract conduct may be actionable. | Unconscionability is a defense, not an affirmative claim; pre-contract conduct generally not actionable. | Count XI dismissed without prejudice; Count XIII dismissed with prejudice |
| FDCPA applicability to mortgage lenders/foreclosure | Defendants’ collection practices violated FDCPA and tainted foreclosure. | FDCPA applies to debt collectors; lenders/servicers pursuing non-judicial foreclosures are not debt collectors. | Count XVII dismissed without prejudice |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (Supreme Court 2009) (plausibility pleading standard; not every conclusory assertion suffices)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (Supreme Court 2007) (pleading must contain factual content that makes claims plausible)
- Ritchie v. United States, 342 F.3d 903 (9th Cir. 2003) (court may consider documents incorporated by reference without converting motion)
- Swartz v. KPMG LLP, 476 F.3d 756 (9th Cir. 2007) (fraud claims require identifying the role of each defendant)
- Phillips v. Bank of Am., N.A., 2011 WL 240813 (D. Haw. 2011) (relying on Hawaii context for bad-faith and related claims)