Editor: David Reiss
Brooklyn Law School

March 7, 2013

Hawaii District Court Grants Defendants Motion for Summary Judgment against Plaintiff Homeowners for Foreclosure

By Jeffrey Lederman

In Krakaeur v. Indymac, 2010 U.S. Dist. Lexis 132284 (2010), the United States District Court for the District of Hawaii granted motion for summary judgment of Defendants IndyMac Mortgage Services and OneWest Bank, entitling Defendants to a decree of foreclosure on the disputed property and a possible deficiency judgment.

On March 31, 2006, to build a home on their property, Plaintiffs Dean and Robbin Krakaeur executed and delivered a promissory note in favor of IndyMac Bank in the amount of $546,00. A mortgage was recorded on April 7, 2006 and assigned to OneWest as early as March 19, 2009. Plaintiffs made mortgage payments from August 2008 – April 2009. In September 2009, OneWest recorded a “notice of intent to foreclose under power of sale” for $636,274.15.

Initially Plaintiffs offered to settle with defendants for $749,000, conditioned upon Defendants sending original note to a third-party escrow agent.

Plaintiffs asserted five counts against Defendants:

Plaintiffs first allege that Defendants violated the Unfair Trade Practices Involving Non Compliance Under 15 U.S.C. § 1802 et. seq. for failing to disclose original documentation pertaining to the mortgage. As the court found this section of law is only found in the “US Code Chapter on Newspaper Preservation,” Defendants were granted summary judgment.

The Plaintiffs’ second and third claims allege Defendants violated TILA, 15 U.S.C. § 1601 et seq., by failing to give Plaintiffs three day right to rescind and other required documentation disclosures. Plaintiff’s rescission, 15 U.S.C. § 1635 and statutory damage, 15 U.S.C. § 1640, claims were both time barred. The court did not grant Plaintiffs’ equitable tolling protection under the statutory damage provision because Plaintiffs offered no evidence as to demonstrate why they failed to discover the alleged deceptive business practices earlier.

The Plaintiffs’ fourth claim alleged Defendants violated Hawaii’s Unfair and Deceptive Trade Practices Act H.R.S. §§ 480-2 and 480-13, which the court dismissed for failure to submit evidence to support their conclusory allegations.

The Plaintiffs’ fifth claim, alleging Unfair and Deceptive Acts in Violation of UCC 1-304, 3-302.C., 3-309. 8-102.17, 8-105, 8-107, 9-0203, were found by the court to be unintelligible and without evidentiary support for their claims, granted summary judgment.

The Defendants’ motion for summary judgment as to counterclaims for foreclosure were granted. Plaintiffs opposition rooted in the claim that Defendants are not in possession of the original note and mortgage, their failure to produce these items, and their failure to record assignment of mortgage until July 6, 2010.

As there was no genuine dispute that Defendants possessed the original note and the Hawaii courts have rejected “show me the note arguments” the court dismissed these first two motions.

The court also denied Plaintiff’s argument that Defendants lacked standing due to delayed recordation of ownership. Following IndyMac v. Miguel, 117 Haw. 506 (Haw. Ct. App. 2008), to “hold form over substance” would burden the court, especially considering that the same result would occur in this case, and no meaningful delay affected any parties’ rights, since OneWest perfected its rights soon after filing for foreclosure against the plaintiffs.

Lastly, there is no genuine issue of material fact regarding the existence of the terms of the note, no dispute as to whether Plaintiffs received the loan, and no dispute as to whether the Plaintiff neglected to cure the default on the mortgage, meeting the criteria necessary for summary judgment.

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