Teaupa v. U.S. National Bank N.A.
836 F. Supp. 2d 1083
D. Haw.2011Background
- Plaintiffs Teaupa filed a Second Amended Complaint naming U.S. Bank, Infinity, BNC, and MERS over a 2006 loan secured by property in Kailua-Kona, Hawaii.
- U.S. Bank foreclosed the loan, obtained a foreclosure judgment, and purchased the property at a 2011 auction; it is unclear if sale has been confirmed.
- Plaintiffs allege multiple federal and state law theories (TILA, RESPA, UDAP, fiduciary duty, etc.) and seek declaratory, injunctive relief, and damages or rescission.
- U.S. Bank moved to dismiss under Fed. R. Civ. P. 12(b)(6); Plaintiffs did not oppose, and later sought to extend settlement conference and amend the complaint.
- The court dismissed most Counts as failing to state a cognizable claim, with several counts dismissed without leave to amend, and ordered service-related Show Cause on Infinity, BNC, and MERS under Rule 4(m).
- The court concluded that a number of claims were time-barred or unrecognized under Hawaii law and that service defects precluded action against non-served Defendants.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are Counts I and II independent claims or merely remedies? | Plaintiffs seek declaratory and injunctive relief as independent rights. | Declaratory and injunctive requests are remedies, not standalone causes of action. | Counts I–II dismissed as non-cognizable independent claims. |
| Is Count III (bad faith implied covenant) viable in mortgage lending context? | Defendants breached implied covenant by underwriting and disclosures. | Hawaii does not recognize bad-faith tort for mortgage contracts; pre-contract conduct cannot support bad faith. | Count III dismissed without leave to amend. |
| Are TILA damages and rescission claims timely or time-barred? | TILA violations and disclosures allegedly improper; tolling possible. | Damages claim time-barred; rescission claim under § 1635(f) is a three-year repose and barred. | TILA damages dismissed as time-barred against U.S. Bank (and not extended to others); rescission dismissed as time-barred; tolling not shown. |
| Do RESPA claims survive against the defendants and are they time-barred or improperly pleaded? | Non-disclosures and servicing transfer issues under RESPA § 2605, § 2607, and § 2605(f) entitle relief. | § 2607 claims cannot support injury; many RESPA claims are time-barred or improperly pleaded; non-servicer claims lack basis. | Count V against U.S. Bank dismissed without leave to amend; dismissal as to Infinity and BNC with leave to amend on § 2605 claim; other RESPA claims dismissed sua sponte with leave to amend for Infinity and BNC. |
| Do Counts VI–X (rescission, UDAP, predatory lending, quiet title, lack of standing) state cognizable claims? | Multiple independent grounds for relief including rescission and fiduciary duties. | Rescission is a remedy; predatory lending lacks a cognizable standalone claim; lack of standing/quiet title require tender and proper pleading. | Counts VI, VII, VIII, IX, X, XI, XII dismissed without leave to amend; issues of tolling and service noted; leave to amend denied except potential limited amendment on Count V. |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (pleading must show plausible claim; mere conclusory allegations insufficient)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (U.S. 2007) (plausibility pleading standard)
- Best Place v. Penn Am. Ins. Co., 82 Hawai'i 120, 920 P.2d 334 (Haw. 1996) (bad-faith tort generally not recognized outside insurance context)
- Nymark v. Heart Fed. Sav. & Loan Ass’n., 231 Cal.App.3d 1089, 283 Cal.Rptr. 53 (Cal. Ct. App. 1991) (lenders owe no fiduciary duty to borrowers absent special circumstances)
- King v. California, 784 F.2d 910 (9th Cir. 1986) (statutes of limitations and tolling considerations under federal law)