Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-11-17158/USCOURTS-ca9-11-17158-0/pdf.json

Parties Involved:
BAC Home Loans Servicing, LP
Appellee
Bank of America Corporation
Appellee
Watoshina Lynn Compton
Appellant
Countrywide Financial Corporation
Appellee
Countrywide Home Loans, Inc.
Appellee
DOES
Appellee
U.S. Bank N.A.
Appellee
U.S. Bank National Association as Trustee
Appellee

Document Text:

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

WATOSHINA LYNN COMPTON,

Plaintiff-Appellant,

v.

COUNTRYWIDE FINANCIAL

CORPORATION; COUNTRYWIDE

HOME LOANS, INC.; BANK OF

AMERICA CORPORATION; BAC

HOME LOANS SERVICING, LP; U.S.

BANK NATIONAL ASSOCIATION AS

TRUSTEE, for CSMC MortgageBacked Pass Through Certificates,

Series 2006-7; U.S. BANK N.A.;

DOES, JOHN AND MARY DOES, 1–10,

Defendants-Appellees.

No. 11-17158

D.C. No.

1:11-cv-00198-

SOM-BMK

OPINION

Appeal from the United States District Court

for the District of Hawaii

Susan Oki Mollway, Chief District Judge, Presiding

Argued and Submitted

June 11, 2014—Honolulu, Hawaii

Filed August 4, 2014

Before: William A. Fletcher, Sandra S. Ikuta,

and Andrew D. Hurwitz, Circuit Judges.

Opinion by Judge Ikuta

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2 COMPTON V. COUNTRYWIDE FINANCIAL CORP.

SUMMARY*

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.

* This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

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COMPTON V. COUNTRYWIDE FINANCIAL CORP. 3

COUNSEL

James Harry Fosbinder, Ivey Fosbinder Fosbinder, LLC,

Wailuku, Hawaii, for Plaintiff-Appellant.

Dennis Peter Maio (argued) and Rosalie Euna Kim, Reed

Smith LLP, San Francisco, California, for DefendantsAppellees.

OPINION

IKUTA, Circuit Judge:

Watoshina Lynn Compton appeals the district court’s

dismissal of her claim under section 480-2 of the Hawaii

Revised Statutes, which authorizes consumers to “bring an

action based upon unfair or deceptive acts or practices.” 

Haw. Rev. Stat. § 480-2(d) (referred to herein as a UDAP

claim). Because Compton’s complaint adequately alleges

that unfair and deceptive acts by Bank of America

Corporation (BAC)1caused an injury resulting in damages,

we reverse the district court.

I

We assume the following facts taken from the complaint

are true for the purpose of our review. See Metzler Inv.

1 Although the allegations in the complaint refer to various entities

associated with BAC, such as BAC Home Loan Servicing, L.P.,

Countrywide Financial Corporation, and Countrywide Home Loans, Inc.,

for convenience we refer to these entities as BAC.

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4 COMPTON V. COUNTRYWIDE FINANCIAL CORP.

GMBH v. Corinthian Colls., Inc., 540 F.3d 1049, 1055 n.1

(9th Cir. 2008).

In 2003, Compton purchased a piece of real property

through a privately funded construction loan. Compton later

sought to refinance this loan and, in May 2006, executed a

promissory note and mortgage giving Countrywide Home

Loans, Inc., a security interest in the property. After

Compton refinanced her mortgage and before the events at

issue in this case, BAC acquired Countrywide.

After making timely loan payments for more than two

years, Compton began suffering financial difficulties due to

a decline in her fiberglass pool business. In August 2008,

while still making timely payments, Compton contacted BAC

to inquire about modifying her loan to lower the monthly

payments. The BAC representative informed her that she

would not qualify for a loan modification unless she was at

least 30 days behind on her loan payments. Compton

continued making timely payments for another eight months.

In May 2009, Compton stopped making loan payments

and subsequently applied for a loan modification. According

to her complaint, Compton’s simple request to modify her

loan resulted in a twenty-month entanglement in a

Kafkaesque nightmare. Compton alleges that during the

period from May 2009 to August 2010, she indefatigably

sought a loan modification, while BAC intentionally

frustrated her efforts, gave her misleading and erroneous

advice, and imposed a never-ending list of new requirements

and demands, despite knowing that a loan modification

agreement would never be forthcoming. After Compton

submitted her first loan modification application, the

complaint alleges, a series of ever-changing BAC

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COMPTON V. COUNTRYWIDE FINANCIAL CORP. 5

representatives told Compton that the application was under

review, continued to demand further documentation, failed to

respond to her requests for updates, and finally told her that

her loan modification application file had been closed. Her

second loan modification application met with the same fate. 

In August 2009, BAC approved her third loan modification

application and sent Compton a modification agreement. 

After Compton signed the modification agreement, had it

notarized, and returned it to the bank, a BAC representative

informed her that the agreement was incomplete due to a

problem with the notary’s signature block. Compton

submitted re-notarized documents, but a BAC representative

told Compton that the notary stamp was still deficient and she

would have to submit a fourth modification application. 

After Compton submitted this fourth application, BAC

representatives assured Compton that the bank would not

commence foreclosure proceedings while the modification

process was underway. Despite these repeated assurances, on

August 26, 2010, Compton learned that a notice of

foreclosure had been recorded against her property. When

she contacted BAC regarding the foreclosure notice, she

learned that her fourth application had been denied due to

“lack of documentation” and her file closed on August 19,

2010. Several months later, when Compton tried to apply for

a fifth time, a different representative informed Compton that

the foreclosure notice rendered her ineligible for a loan

modification.

On March 28, 2011, Compton filed a complaint in the

district court alleging a UDAP claim under section 480-2(d),

among other claims, and seeking injunctive relief and

monetary damages. Compton alleged that BAC engaged in

unfair and deceptive acts and practices, including:

(1) misinforming her that only borrowers who were at least

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6 COMPTON V. COUNTRYWIDE FINANCIAL CORP.

30 days behind on their mortgage payments were eligible for

loan modifications, although BAC does not, in fact, have such

a requirement; (2) purposefully delaying her efforts to

negotiate a loan modification and repeatedly terminating her

loan modification requests; (3) misrepresenting the length of

time it would take to process her loan modification, and

knowingly and purposefully drawing out the modification

process so that she would end up in foreclosure; and

(4)misrepresenting that foreclosure proceedings would not be

brought against her so long as her loan modification

application remained pending, and then backdating

paperwork so it would falsely appear that BAC commenced

foreclosure proceedings only after denying her loan

modification application. Compton alleges that as a result of

BAC’s misrepresentations and delays, she spent almost two

years in a futile effort to modify her mortgage loan and, as a

result of failing to obtain a modification, ended up in

foreclosure.

The defendants filed a motion to dismiss Compton’s

complaint for failure to state a claim.

The district court granted the defendants’ motion as to all

claims. The district court dismissed Compton’s UDAP claim

without prejudice for failure to state a claim. Compton v.

Countrywide Fin. Corp., Civ. No. 11-00198 SOM-BMK,

2011 WL 2746807, at *6 (D. Haw. July 13, 2011). Compton

elected not to amend her complaint, and the district court

entered final judgment on August 16, 2011. Compton has

appealed the judgment only as to the dismissal of her UDAP

claim.

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COMPTON V. COUNTRYWIDE FINANCIAL CORP. 7

II

Hawaii enacted section 480-2 “in broad language in order

to constitute a flexible tool to stop and prevent fraudulent,

unfair or deceptive business practices for the protection of

both consumers and honest businessmen.” Ai v. Frank Huff

Agency, Ltd., 61 Haw. 607, 616 (1980), overruled on other

grounds by Robert’s Haw. Sch. Bus, Inc. v. Laupahoehoe

Transp. Co., 81 Haw. 224 (1999). State courts construe this

section liberally, Haw. Cmty. Fed. Credit Union v. Keka,

94 Haw. 213, 229 (2000), in light of the state legislature’s

intention to “‘encourage those who have been victimized by

persons engaging in unfair or deceptive acts or practices to

prosecute their claim,’ thereby affording ‘an additional

deterrent to those who would practice unfair and deceptive

business acts,’” Zanakis-Pico v. Cutter Dodge, Inc., 98 Haw.

309, 317 (2002) (quoting S.R. No. 600, at 1111 (1969)

(Comm. Rep.); H.R. No. 661, at 882–83 (1969) (Comm

Rep.)).

Under section 480-2(a), “unfair or deceptive acts or

practices in the conduct of any trade or commerce are

unlawful.” Haw. Rev. Stat. § 480-2(a).2 Hawaii courts have

held that “[a] practice is unfair when it offends established

public policy and when the practice is immoral, unethical,

oppressive, unscrupulous or substantially injurious to

consumers.” Balthazar v. Verizon Haw., Inc., 109 Haw. 69,

 

2

 Section 480-2(a) provides in full:

Unfair methods of competition and unfair or deceptive

acts or practices in the conduct of any trade or

commerce are unlawful.

Haw. Rev. Stat. § 480-2(a).

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8 COMPTON V. COUNTRYWIDE FINANCIAL CORP.

77 (2005) (alteration in original) (quoting Keka, 94 Haw. at

228).

Although the statute does not define the term “deceptive,”

Hawaii courts construe it “in accordance with judicial

interpretations of similar federal antitrust statutes.” Courbat

v. Dahana Ranch, Inc., 111 Haw. 254, 261 (2006) (quoting

Haw. Rev. Stat. § 480-3); see also Haw. Rev. Stat. § 480-2(b)

(requiring courts to construe the statute with “due

consideration” to FTC rules, regulations, and decisions). 

Under this interpretation, “a deceptive act or practice is ‘(1) a

representation, omission, or practice[] that (2) is likely to

mislead consumers acting reasonablyunder the circumstances

[where] (3) [] the representation, omission, or practice is

material.’” Courbat, 111 Haw. at 262 (alterations in original)

(quoting FTC v. Verity Int’l, Ltd., 443 F.3d 48, 63 (2d Cir.

2006)). “A representation, omission, or practice is considered

‘material’ if it involves ‘information that is important to

consumers and, hence, likely to affect their choice of, or

conduct regarding, a product.’” Id. (quoting Novartis Corp.

v. FTC, 223 F.3d 783, 786 (D.C. Cir. 2000)). This inquiry is

objective—the test is “whether the act or omission ‘is likely

to mislead consumers.’” Id. (quoting Verity Int’l, 443 F.3d at

63). Material misrepresentations made during the course of

loan negotiations can constitute an unfair or deceptive act

within the meaning of section 480-2(a). See Keka, 94 Haw.

at 229.

Finally, the Hawaii Supreme Court has determined that “a

loan extended by a financial institution is activity involving

‘conduct of any trade and commerce.’” Id. at 227; see Haw.

Rev. Stat. § 480-2(a) (making unfair or deceptive acts or

practices unlawful only when they arise “in the conduct of

any trade or commerce”).

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COMPTON V. COUNTRYWIDE FINANCIAL CORP. 9

Section 480-13(b)(1) provides that “[a]ny consumer who

is injured by any unfair or deceptive act or practice” that

violates section 480-2 “[m]ay sue for damages sustained by

the consumer.” Haw. Rev. Stat. § 480-13(b)(1). “[L]oan

borrowers are ‘consumers’ within the meaning of [the

statute].” Keka, 94 Haw. at 227. To obtain relief under

section 480-13(b)(1), a consumer must establish three

elements: “(1) a violation of [section] 480-2; (2) injury to the

consumer caused by such a violation; and (3) proof of the

amount of damages.” Davis v. Wholesale Motors, Inc.,

86 Haw. 405, 417 (Ct. App. 1997) (citing Ai, 61 Haw. at 617,

and Cieri v. Leticia Query Realty, Inc., 80 Haw. 54, 61–62

(1995)).

Although the statute does not define either “injury” or

“damages,” see Zanakis-Pico, 98 Haw. at 316, Hawaii courts

have not set a high bar for proving these elements. The

plaintiff must show only that the alleged violations of section

480-2(a) caused “private damage,” Kekauoha-Alisa v.

Ameriquest Mortg. Co. (In re Kekauoha-Alisa), 674 F.3d

1083, 1092 (9th Cir. 2012) (quoting Ai, 61 Haw. at 618), and

that the plaintiff’s injury is “fairlytraceable to the defendant’s

actions,” Flores v. Rawlings Co., 117 Haw. 153, 167 n.23

(2008) (quoting Cieri, 80 Haw. at 66). Because deceptive

acts “do their damage when they induce action that a

consumer would not otherwise have undertaken,” a consumer

who can show “a resulting injury” is entitled to damages even

if the consumer has not actually consummated a particular

transaction. Zanakis-Pico, 98 Haw. at 317. For instance, a

consumer could recover damagesfor “out-of-pocket expenses

for a money order, gasoline, parking, and wear and tear on

[an] automobile that resulted from [an] unfair business

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10 COMPTON V. COUNTRYWIDE FINANCIAL CORP.

practice.”3Id. at 319 (citing Wiginton v. Pac. Credit Corp.,

2 Haw. App. 435, 444 (1981)). A plaintiff’s “allegation that

he has, as a ‘direct and proximate result’ of [defendant’s]

violation [of section 480-2], ‘sustained special and general

damages’ suffices to withstand a motion to dismiss under

Rule 12(b)(6).” Jenkins v. Commonwealth Land Title Ins.

Co., 95 F.3d 791, 799 (9th Cir. 1996); see also Zanakis-Pico,

98 Haw. at 330 (holding that a plaintiff adequately alleges

special damages by claiming “special damages in such

amounts as will be proved at trial”).

III

We review de novo the district court’s dismissal of a

complaint for failure to state a claim pursuant to Rule

12(b)(6) of the Federal Rules of Civil Procedure. Cervantes

v. Countrywide Home Loans, Inc., 656 F.3d 1034, 1040 (9th

Cir. 2011). “To survive a motion to dismiss, a complaint

must contain sufficient factual matter, accepted as true, to

‘state a claim to relief that is plausible on its face.’” Ashcroft

v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v.

Twombly, 550 U.S. 544, 570 (2007)). “[L]abels and

conclusions” or “a formulaic recitation of the elements of a

cause of action” do not suffice. Twombly, 550 U.S. at 555.

3 The Hawaii Supreme Court has held that emotional distress and other

personal injury damages are not available under section 480-13(b)(1). 

Zanakis-Pico, 98 Haw. at 319. “‘[B]enefit-of-the-bargain’ damages” and

specific performance are not available unless a contract exists between the

parties. Id.

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COMPTON V. COUNTRYWIDE FINANCIAL CORP. 11

A

The district court gave two reasons for its conclusion that

Compton failed to state a claim under sections 480-2 and 480-

13. First, it stated that “lenders generally owe no duty to a

borrower ‘not to place borrowers in a loan even where there

was a foreseeable risk borrowers would be unable to repay,’”

Compton, 2011 WL 2746807, at *6 (quoting Marzan v. Bank

of Am., 779 F. Supp. 2d 1140, 1152 (D. Haw. 2011)), and a

lender has no duty to determine whether a borrower is

qualified for a loan, id. This reasoning is not directly

applicable to Compton’s UDAP claim, which was based on

allegations that BAC “made material [mis]representations

and purposefully delayed Plaintiff’s modification efforts,” id.

(internal quotation marks omitted), not on the theory that

BAC had placed her in a loan for which she was not

qualified.

Second, the district court stated that, “as a general rule, a

financial institution owes no duty of care to a borrower when

the institution’s involvement in the loan transaction does not

exceed the scope of its conventional role as a mere lender of

money.” Id. (quoting Nymark v. Heart Fed. Sav. & Loan

Ass’n, 231 Cal. App. 3d 1089, 1096 (1991)). Under this

reasoning, the district court implicitly held that Compton

could not state a claim for unfair or deceptive acts and

practices unless her complaint alleged that BAC owed her a

duty of care, and that she could not make such an allegation

absent a showing that BAC’s conduct exceeded the scope of

behaving as “a mere lender of money.”

We disagree with the district court’s rationale, which

seems to be based on a long line of federal district court

decisions holding that a lender’s decision to approve a loan to

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12 COMPTON V. COUNTRYWIDE FINANCIAL CORP.

a borrower who could not afford the payments does not

constitute a cognizable claim under sections 480-2 and 480-

13, absent allegations that the lender exceeded the scope ofits

role as a lender of money and owed the borrower a duty of

care. See, e.g., Teaupa v. U.S. Nat’l Bank N.A., 836 F. Supp.

2d 1083, 1099 (D. Haw. 2011) (relying on this theory to

dismiss a UDAP claim for failure to state a claim); Marzan,

779 F. Supp. 2d at 1152 (same); see also Swartz v. City

Mortg., Inc., 911 F. Supp. 2d 916, 942 (D. Haw. 2012)

(relying on this theory to grant summary judgment in favor of

the lender); Wood v. Greenberry Fin. Servs., Inc., 907 F.

Supp. 2d 1165, 1184 (D. Haw. 2012) (same); Stanton v. Bank

of Am., N.A., 834 F. Supp. 2d 1061, 1082 (D. Haw. 2011)

(same).

None of these cases is directly applicable to Compton’s

complaint, which did not allege that BAC allowed her to

obtain a loan for which she was unqualified. It is

understandable, however, how the district courts’ reasoning

in these prior cases misled the district court here. Had these

courts applied the plain language of section 480-2, theymight

well have concluded that a lender’s failure in the ordinary

course of business to make an adequate assessment of a

borrower’s qualifications does not constitute an unfair or

deceptive practice, although this precise question is not

before us. But rather than take this straightforward approach,

the opinions listed above (among others) rested their analysis

on common law tort principles, reasoning that: (1) a lender

generally “owes no duty of care to a borrower when the

institution’s involvement in the loan transaction does not

exceed the scope of its conventional role as a mere lender of

money,” Marzan, 779 F. Supp. 2d at 1152 (quoting Nymark,

231 Cal. App. 3d at 1096); (2) therefore “lenders generally

owe no duty to a borrower ‘not to place borrowers in a loan

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COMPTON V. COUNTRYWIDE FINANCIAL CORP. 13

even where there was a foreseeable risk borrowers would be

unable to repay,’” id. (quoting McCarty v. GCP Mgmt., LLC,

Civ. No. 10-00133 JMS/KSC, 2010 WL 4812763, at *6 (D.

Haw. Nov. 17, 2010)); and thus (3) absent an allegation that

the lender owed the borrower a common law duty of care

(which could not occur unless the lender exceeded its role as

a lender), an allegation that the lender allowed an unqualified

borrower to obtain a loan does not state a claim under

sections 480-2 and 480-13, see id. Logically, this reasoning

is based on the unstated premise that a lender cannot be held

liable under sections 480-2 and 480-13 unless the lender owes

the borrower a common law duty of care.

Contrary to this line of federal district court opinions,

borrowers are not obliged to show that the lender owed the

borrower a common law duty of care to state a claim under

sections 480-2 or 480-13. Nothing in the plain language of

sections 480-2 or 480-13 requires a plaintiff to make such an

allegation. And we have not identified any decision of a

Hawaii court interpreting sections 480-2 and 480-13 as

imposing such a requirement. The Hawaii Supreme court’s

decision in Keka, 94 Haw. 213, is to the contrary. In

considering a UDAP claim against a lender, Keka held that

the borrowers raised a genuine issue of material fact

regarding whether a violation of section 480-2 occurred

simply by swearing in an affidavit that during loan

negotiations the lender had misrepresented the interest rate

that would apply to the loan. Id. at 228–29. Keka, therefore,

strongly supports the conclusion that section 480-2 does not

require a borrower to allege that a lender “exceed[ed] the

scope of its conventional role as a mere lender of money,”

Nymark, 231 Cal. App. 3d at 1096, and thus may have owed

the borrower an independent duty of care.

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14 COMPTON V. COUNTRYWIDE FINANCIAL CORP.

Accordingly, we conclude 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.” Haw. Rev. Stat. § 480-2(a). 

Thus a borrower need only allege that a lender has breached

that statutory duty (in a way that caused private damages) in

order to state a claim under sections 480-2 and 480-13. See

Davis, 86 Haw. at 417. While courts may well conclude that

a borrower’s allegation that a lender failed “to determine the

creditworthiness and ability to repay by a borrower” does not

breach the statutory duty imposed by section 480-2, Marzan,

779 F. Supp. 2d at 1152 (quoting Sheets v. DHI Mortg. Co.,

Civ. No. 09-1030 LJO DLB, 2009 WL 2171085, at *4 (E.D.

Cal. July 20, 2009)), a borrower’s failure to allege that the

lender’s conduct occurred outside the course of ordinary

lender activity or that the lender owed a duty of care to the

borrower is not fatal to a UDAP claim.

B

Here, the district court dismissedCompton’sUDAP claim

solely on the ground that Compton failed to allege that BAC

exceeded its role as a lender and owed an independent duty of

care to Compton. This reasoning was erroneous. But

because we may affirm the district court on “any ground

supported by the record,” Thompson v. Paul, 547 F.3d 1055,

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COMPTON V. COUNTRYWIDE FINANCIAL CORP. 15

1059 (9th Cir. 2008), we next consider whether BAC can

nevertheless prevail on its motion to dismiss.

As explained above, in order to state a claim under

sections 480-2 and 480-13, Compton must plausibly allege

that (1) she is a “consumer,” see Haw. Rev. Stat. §§ 480-2(d),

480-13(b); (2) BAC violated section 480-2(a), prohibiting

“unfair or deceptive acts or practices in the conduct of any

trade or commerce,” id. § 480-2(a); and (3) she has suffered

an injury resulting in damages, see id. § 480-13(b)(1);

Zanakis-Pico, 98 Haw. at 316.

As a threshold matter, it is undisputed that Compton

qualifies as a “consumer,” and that BAC’s lending and loan

modification activities involve the “conduct of any trade and

commerce.” See Keka, 94 Haw. at 227 (internal quotation

marks omitted).

We also conclude that Compton has sufficiently alleged

that BAC engaged in an “unfair or deceptive act or practice”

for the purpose of withstanding a motion to dismiss. As

previously noted, Compton does not base her UDAP claim on

allegations that BAC failed to determine whether she would

be financially capable of repaying the loan. Rather, the gist

of Compton’s complaint is that BAC misled her into

believing that BAC would modify her loan and would not

commence foreclosure proceedings while her loan

modification request remained under review. As a result of

these misrepresentations, Compton engaged in prolonged

negotiations, incurred transaction costs in providing and

notarizing documents, and endured lengthy delays. The

complaint’s description of BAC’s misleading behavior

sufficiently alleges a “representation, omission, or practice”

that is likely to deceive a reasonable consumer. Courbat,

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16 COMPTON V. COUNTRYWIDE FINANCIAL CORP.

111 Haw. at 262. Moreover, BAC’s misrepresentations and

misleading conduct were material, in that they involved

information important to a consumer attempting to negotiate

with a mortgagor to prevent foreclosure. Id.

We next turn to the question whether the complaint

adequately alleged an injury resulting in damages. In the

section relating to the UDAP claim, the complaint merely

states that Compton suffered “considerable hardship” due to

spending “almost two years attempting to modify her

mortgage loan” and ending up in foreclosure. This section

also incorporates by reference the preceding paragraphs in the

complaint. The complaint’s factual allegations detail the

various transaction costs Compton incurred in attempting to

meet BAC’s never-ending and ever-changing requirements. 

These allegations of the damages proximately caused by the

lender’s deceptive acts, namely the costs suffered by

Compton in connection with the failed loan negotiations, are

sufficiently pleaded to survive a motion to dismiss.

In addition, the complaint states that had Compton been

able to enter into a loan modification agreement, she would

not have defaulted or faced foreclosure, and the foreclosure

caused her to incur attorney fees, late payment payments, and

lost business income. These allegations were made in

connection with a breach of contract claim, however, and the

complaint does not state that BAC’s misleading loan

modification practices resulted in the foreclosure or

consequential damages at issue. Accordingly, the complaint

does not allege a basis for Compton to recover equitable

remedies such as relief from foreclosure through her UDAP

claim.

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COMPTON V. COUNTRYWIDE FINANCIAL CORP. 17

Given Hawaii’s low bar for showing damages, we

conclude that for the purpose of a motion to dismiss

Compton’s allegations that BAC’s deceptive conduct caused

her to waste two years of effort and incur multiple transaction

costs are sufficient to state an injury that caused damages. 

See Jenkins, 95 F.3d at 799 (holding that a complaint’s mere

conclusory statement that the plaintiff has “sustained special

and general damages” due to defendant’s violation of section

480-2 suffices to withstand a motion to dismiss).

Accordingly, Compton has “nudged” her UDAP claim

“across the line from conceivable to plausible.” Twombly,

550 U.S. at 570. We therefore REVERSE the district court’s

dismissal of Compton’s UDAP claim and REMAND for

proceedings consistent with this opinion.

 Case: 11-17158, 08/04/2014, ID: 9191548, DktEntry: 54-1, Page 17 of 17