Marzan v. Bank of America
779 F. Supp. 2d 1140
D. Haw.2011Background
- Plaintiffs Alfred and Adelaida Marzan allege mortgage-related claims arising from a 2006 loan on 94-102 Heahea Street, Waipahu, Hawaii.
- Defendants include Bank of America, Countrywide, First Magnus, Old Republic Title & Escrow, and MERS; plaintiffs sue under federal and state law theories seeking relief and potential rescission.
- Old Republic and MERS move to dismiss all counts; arguments focus on scope of TILA/RESPA, lack of cognizable claims, and pre/post-contract limitations.
- The court grants the motions to dismiss various counts with leave to amend certain counts, concluding dismissal is warranted for many pleaded theories.
- Plaintiffs are given a deadline to file an amended complaint to cure deficiencies, with detailed guidance on tying claims to specific Defendants.
- The order clarifies Counts I, II, III, V, VI are dismissed without leave to amend, while Counts IV (damages TILA), IX–XI, and XII may be amended depending on defendants, with leave for fraud claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are Counts I and II independent claims or remedial in nature? | Marzan contends for declaratory and injunctive relief as independent actions. | MERS and Old Republic argue these are remedies, not standalone actions. | Counts I & II dismissed as improper independent claims. |
| Does Count III (bad faith) state a viable claim under Hawaii law? | Plaintiffs allege breach of implied covenant of good faith in underwriting and loan conduct. | There is no recognized bad faith claim for mortgage contracts outside insurance context; pre-contract conduct cannot breach implied covenant. | Count III dismissed with prejudice; futile to amend. |
| Is the TILA claim for damages time-barred against MERS and others, and can tolling apply? | Damages claim timely or tollable due to concealment; tolling available if fraud prevented discovery. | Claims are untimely; no adequate tolling allegations; Old Republic not creditor for TILA. | Damages claim against MERS and others dismissed as time-barred; equitable tolling not established. |
| Is the TILA rescission claim time-barred and viable against any defendant? | Rescission right exists if disclosures were not provided; tolling may apply. | Rescission claims are barred by § 1635(f) three-year repose; tolling not applicable here. | Rescission claim dismissed as time-barred; amendment futile. |
| Do RESPA (Count V) and other RESPA-based claims state a plausible claim and are they timely? | Alleges egregious fees and hidden yields/referrals under RESPA § 2607. | § 2607 does not prohibit all fees; complaint is conclusory and likely time-barred; equitable tolling possible but not shown. | Count V (RESPA) dismissed; time-barred and conclusory; limited leave to amend where plausible. |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (plausibility standard; conclusory allegations insufficient)
- Seattle Audubon Soc. v. Moseley, 80 F.3d 1401 (9th Cir. 1996) (Declaratory Judgment Act considerations; actual controversy requirement)
- Best Place v. Penn Am. Ins. Co., 82 Haw. 120 (Haw. 1996) (bad faith tort requires insurer context; generally no such action in mortgage contracts)
- 389 Orange St. Partners v. Arnold, 179 F.3d 656 (9th Cir. 1999) (equitable tolling and pleading standards; fraud specificity under Rule 9(b))
- Mangindin v. Washington Mut. Bank, 637 F. Supp. 2d 700 (N.D. Cal. 2009) (bad faith/underwriting roles; non-insurance context lacks bad faith action)
- McCarty v. GCP Mgmt., LLC, 2010 WL 4812763 (D. Haw. 2010) (lenders generally owe no fiduciary duty to borrowers; not binding here but cited)
- Nymark v. Heart Fed. Sav. & Loan Ass'n, 231 Cal. App. 3d 1089 (Cal. Ct. App. 1991) (lender–borrower relationship not fiduciary absent special circumstances)
- Washington Mut. Bank v. Mangindin, 637 F. Supp. 2d 700 (N.D. Cal. 2009) (cited for pre-contract duties and bad faith considerations)