Real Cases in Real Estate By Andrea Lee Negroni, Esq. – January 9th, 2012 Update

Real Cases in Real Estate By Andrea Lee Negroni, Esq. – January 9th, 2012 Update

Real Cases in Real Estate is a weekly update on real estate law, with legal principles illustrated and explained by lawsuits from around the country. The topics are wide-ranging for appeal to a broad spectrum of readers including lawyers, homeowners, investors and the general public. Andrea Lee Negroni, a Washington DC attorney and legal writer with 25 years of experience in financial services and mortgage law, contributes the case summaries.

Followers of Real Cases in Real Estate will learn and be entertained by lawsuits involving nuisance, trespass, zoning violations, deed restrictions, title insurance, public utilities, mechanics liens, construction defects, adverse possession, foreclosure and eviction, divorce and marital property rights, tenants' rights, and more. Real Cases in Real Estate uncovers the unpredictable, amusing, and sometimes outrageous disputes between next-door neighbors, contractors and homeowners, condo boards and residents, real estate brokers and homebuyers, and zoning administrators and developers.

Each fully cited case summary highlights the essential law of the case and explains the principal legal theories and concepts relevant to the outcome. Plain language treatment makes Real Cases in Real Estate accessible to lawyers and laymen alike.

Whether you follow real estate law professionally or as a hobby, you'll find something new and useful every week in Real Cases in Real Estate.

Updates for the Week of January 9th, 2012

"Formulaic Claims" Against Assignee of a Mortgage Lender Don't Cut Ice in Hawaii.

The Rodenhursts sued Bank of America for harms they claimed resulted from a 2007 refinance of their Hawaii loan with Countrywide Home Loans. After defaulting on the loan, their lawsuit claimed everything from fraud to conspiracy, with intentional infliction of emotional distress thrown in. The borrowers' attorney filed defective complaints, which were amended several times. The amended complaints added defendants and causes of action without leave of the Court, and the Court's exasperation with the plaintiff's lawyers comes through in the decision.

Lenders will take heart in the holding that Bank of America cannot be held liable for claims against Countrywide because the borrowers did not allege facts to support a theory of derivative liability. "Liability does not attach merely because one is an assignee."  The borrowers' claim that RESPA's Qualified Written Request rule was violated was dismissed because they sent their request to the noteholder, not the loan servicer. Third, the borrowers claimed they were defrauded by Bank of America, but this too was dismissed, the court noting that BOA could not be liable for fraud merely because it eventually became the assignee of their loan. As the decision notes, "other courts have dismissed claims against BOA where BOA was named solely because of allegations that it was the parent company of Countrywide." Moreover, the borrowers could not make valid fraud claims against Bank of America because "fraud claims are inappropriate to assert against an assignee where there are no allegations that the assignee had any contact with the mortgagor or made any representations to the mortgagor..."

The borrowers also claimed breach of fiduciary duty, but the Court held "lenders typically do not owe fiduciary duties to their borrowers." In dismissing the claim for intentional and negligent infliction of emotional distress, the Court noted that the statement that the defendants caused "severe mental and emotional distress" was a legal conclusion, not supported by specific facts suggesting recklessness or outrageous conduct by the defendants.

The decision shines a bright light on what can only be described as poor lawyering and ignorance or disregard of Court orders by the plaintiffs' counsel. Finding that the deficient complaints wasted the parties' and court's resources, the defendant's motion to dismiss was granted and the case dismissed with prejudice.

Rodenhurst v Bank of America FKA Countrywide Home Loans, Civil No. 10-00167 LEK-BMK, Sept. 30, 2011 (D. Hawaii) [enhanced version available to subscribers].

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