Swartz v. City Mortgage, Inc.
911 F. Supp. 2d 916
D. Haw.2012Background
- Plaintiffs Swartz filed suit on November 8, 2010 against Citi Mortgage, Inc. and ABN Amro Mortgage Group, Inc. (Moving Defendants) and others over a mortgage loan and foreclosure related to the Property.
- ABN was merged into CMI on September 1, 2007; the merger was recorded March 25, 2008; servicing was transferred to CMI in August 2007.
- Plaintiffs allege dual loans were originated in 2006 with higher rates and terms than promised, improperly disclosed, and without adequate reading time; they claim misrepresentations by third parties and improper securitization.
- Foreclosure proceeded nonjudicially; a sale occurred on October 20, 2010 to a third-party bidder for $508,501, with a quitclaim deed not yet recorded.
- Defendants contended Plaintiffs were not financially unsophisticated given their ownership of multiple properties; Plaintiffs defended by alleging predatory lending and securitization issues.
- The court granted summary judgment for Moving Defendants on all counts, finding no viable federal claims and declining to allow discovery to forestall dismissal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Timeliness of TILA/RESPA claims | TILA/RESPA claims timely due to ongoing loan issues and tolling | Claims time-barred; RESPA not recoverable for some issues; equitable tolling not proven | Time-barred; GRANTED as to Count I |
| FCRA claim viability | Defendants failed to report accurately to credit agencies | FCRA duties apply to furnishers; plaintiff failed to plead essential elements for private action | No genuine issue; GRANTED as to Count II |
| FDCPA verification requirement | Defendants failed to respond and halted verification timely | Plaintiffs did not timely request verification; letter timely provided; untimely requests may be ignored | Untimely verification; GRANTED as to Count XVII |
| ECOA/HMDA private rights | Defendants violated ECOA and HMDA by not providing proper applications and appraisal disclosures | No private HMDA action; ECOA requirements satisfied via broker; no timely written appraisal request | No private right or timely claim; GRANTED as to Count XVIII |
| State law claims and supplemental jurisdiction | Discovery will show additional facts; claims should proceed | No genuine issues; federal claims predominate; decline to exercise; or continue under supplemental jurisdiction | Court exercises supplemental jurisdiction but grants summary judgment on all state claims as well |
Key Cases Cited
- Nymark v. Heart Fed. Sav. & Loan Ass’n, 231 Cal.App.3d 1089 (Cal.App. 1991) (lender-borrower duties generally limited; fiduciary duty requires special circumstances)
- Hawaii's Thousand Friends v. Anderson, 70 Haw. 276 (Haw. 1989) (Restatement-based duties and misrepresentation standards in Hawaii)
- Miyashiro v. Roehrig, Roehrig, Wilson & Hara, 122 Haw. 461 (Ct. App. 2010) (fraud elements and need for clear and convincing evidence in Hawaii)
- Liberty Bank v. Shimokawa, 2 Haw. App. 280 (Haw. Ct. App. 1981) (binding written instrument rule; contract terms govern unless fraud/due process)
- Phillips v. Bank of Am., 2011 WL 240813, 2011 WL 240813 (D. Haw. 2011) (unconscionability as defense or pre-contract context; no standalone unconscionability claim)