Lowther v. U.S. Bank N.A.
2013 U.S. Dist. LEXIS 126282
D. Haw.2013Background
- Plaintiff Patrick Lowther obtained a 2006 mortgage from New Century; Defendant U.S. Bank recorded an assignment of the mortgage in February 2009 and foreclosed non-judicially, with a sale on April 30, 2009.
- Plaintiff alleges the February 2009 Assignment was forged or executed without authority (violating Haw. Rev. Stat. § 708-852(1)) and that U.S. Bank used that Assignment to effectuate foreclosure.
- Plaintiff filed a putative class complaint in state court on April 4, 2013 (removed to federal court), asserting: (Count I) UDAP under Haw. Rev. Stat. ch. 480, (Count II) wrongful foreclosure, (Count III) intentional interference with prospective economic advantage, and (Count IV) trespass.
- Defendant moved to dismiss under Rule 12(b)(6), arguing all claims are time-barred (UDAP subject to a 4-year limit; torts subject to 2-year limit) and that several claims fail as a matter of law or are insufficiently pleaded.
- The court evaluated accrual rules (occurrence vs. continuing violation vs. equitable tolling/fraudulent concealment), pleading sufficiency under Twombly/Iqbal, and which statutes of limitations apply to the wrongful-foreclosure and other tort claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether UDAP claim (Haw. Rev. Stat. ch. 480) is time-barred / accrual rule | Lowther: UDAP accrues when injury occurs (loss of property at foreclosure) or under §480-24(a) as a continuing violation ending with the foreclosure (April 30, 2009), so suit filed April 2013 is timely or recoverable for damages within 4 years | U.S. Bank: UDAP accrues on the occurrence of the wrongful act (the Assignment in Feb. 2009); occurrence rule applies and no continuing violation or tolling shown, so claim filed April 2013 is untimely | Court: Occurrence rule governs; UDAP accrued in Feb. 2009. No pleaded continuing violation; equitable tolling for fraudulent concealment not sufficiently alleged. UDAP dismissed: portion based on continuing-violation theory with prejudice; portion possibly saved by amended fraudulent-concealment allegations without prejudice. |
| Whether Hawai‘i recognizes or plaintiff stated a wrongful-foreclosure claim; applicable statute of limitations | Lowther: Hawai‘i recognizes wrongful-foreclosure claims in appropriate circumstances; claim seeks recovery for loss of title/possession (intangible injury) and should be governed by a 6-year statute (Haw. Rev. Stat. §657-1) | U.S. Bank: Hawai‘i does not recognize wrongful-foreclosure tort (or, alternatively, claim is time-barred under 2-year §657-7) and plaintiff fails to plausibly allege invalidity (no facts showing assignor lacked authority) | Court: Hawai‘i may recognize wrongful-foreclosure claims in limited circumstances. Plaintiff failed to plead facts showing assignor lacked standing; however wrongful-foreclosure claim may be governed by §657-1(1) (six-year) because it concerns non-physical/intangible injury. Count II dismissed without prejudice to amendment. |
| Whether intentional-interference claim is sufficiently pleaded and timely | Lowther: Lost ability to rent/sell Property is a prospective economic advantage; defendant acted knowingly and purposefully | U.S. Bank: Complaint fails to identify a definite third-party expectancy or a specific business relationship; merely alleging property is an economic opportunity is insufficient under Iqbal/Twombly | Court: Complaint fails to plead existence of a definite/probable prospective business relationship; intent/knowledge allegations inadequate. Count III dismissed with prejudice (futility of amendment). |
| Whether trespass claim is pleaded and timely | Lowther: (very limited briefing) alleges trespass based on U.S. Bank’s possession after foreclosure | U.S. Bank: Trespass is subject to 2-year §657-7; plaintiff lost possession at foreclosure (April 30, 2009) so claim is time-barred and complaint fails to plead timing | Court: Trespass claim inadequately pleaded and untimely under §657-7; dismissal with prejudice. |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading must state plausible claim; legal conclusions not accepted as true)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility standard for complaints)
- Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321 (1971) (antitrust statute of limitations and damages within limitations related to continuing conspiracies)
- McDevitt v. Guenther, 522 F. Supp. 2d 1272 (D. Haw. 2007) (UDAP accrual governed by occurrence rule; federal analogues considered)
- Robert's Waikiki U-Drive, Inc. v. Budget Rent-A-Car Sys., Inc., 491 F. Supp. 1199 (D. Haw. 1980) (discussion of accrual and continuing conduct affecting recoverable damages)
- Cervantes v. Countrywide Home Loans, Inc., 656 F.3d 1034 (9th Cir. 2011) (wrongful-foreclosure claims typically premised on non-default or procedural defects causing damages)
- Meridian Mortgage, Inc. v. First Hawaiian Bank, 122 P.3d 1133 (Haw. Ct. App. 2005) (elements and intent standard for interference with prospective economic advantage)
- Higa v. Mirikitani, 517 P.2d 1 (Haw. 1973) (statute-of-limitations analysis: hybrid tort/contract claims and application of §657-1 to intangible injuries)