Compton v. Countrywide Financial Corp., No. 11-17158 (9th Cir. 2014)
Annotate this CasePlaintiff appealed the district court's dismissal of her consumer rights claim under section 480-2 of the Hawaii Revised Statutes (UDAP claim). The court concluded that district courts evaluating whether a borrower's complaint states a claim under sections 480-2 and 480-13 against a lender need only address whether the complaint adequately alleges that the lender used unfair or deceptive acts in its relationship with the borrower, without looking to negligence law to determine whether the lender breached a common law duty of care; rather than requiring proof of a common law duty of care, section 480-2 is better interpreted as imposing a statutory duty on lenders not to engage in unfair or deceptive acts or practices in the conduct of any trade or commerce; and, given Hawaii's low bar for showing damages, the court concluded that for the purpose of a motion to dismiss plaintiff's allegations that BAC's deceptive conduct caused her to waste two years of effort and incur multiple transaction costs were sufficient to state an injury that caused damages. Therefore, plaintiff has alleged a UDAP claim and the court reversed the district court's judgment, remanding for further proceedings.
Court Description: Hawaii Consumer Law. The panel reversed the district court’s Fed. R. Civ. P. 12(b)(6) dismissal of a borrower’s claim brought under Haw. Rev. Stat. § 480-2(d) alleging unfair and deceptive acts by Bank of America Corporation, and remanded. The panel held that when a district court evaluates whether a borrower’s complaint states a claim under Haw. Rev. Stat. §§ 480-2 and 480-13 against a lender, the district court need only address whether the complaint adequately alleged that the lender used unfair or deceptive acts in its relationship with the borrower, without looking to negligence law to determine whether the lender breached a common law duty of care. The panel held that the district court erred in dismissing the borrower’s claim solely on the ground that the borrower failed to allege that the lender exceeded its role as a lender and owed an independent duty of care to the borrower. The panel held that the complaint adequately alleged under Hawaii law unfair and deceptive acts by Bank of America, and injury resulting in damage to the borrower, to withstand a motion to dismiss.
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