Edward J. Pierce et al v. Wilmington Savings Fund Society, FSB et al

Filing 40

MINUTES (IN CHAMBERS) ORDER DISMISSING CASE FOR LACK OF SUBJECT MATTER JURISDICTION AND BECAUSE RES JUDICATA BARS PLAINTIFFS' CLAIMS by Judge Christina A. Snyder: Plaintiffs allege causes of action for breach of contract, fraud, quiet title, and injunctive relief under state law. Plaintiffs' references to 18 U.S.C. Section 1341, 33 U.S.C. Section 931, and 42 U.S.C. Section 1983 do not transform the state law causes of action into federal questions or create federal jurisdiction. The Co urt therefore DISMISSES plaintiffs' claims for lack of subject matter jurisdiction. The Court finds that res judicata bars plaintiffs' instant action. The instant action is precluded by Hobert's 2016 action because both lawsuits share the same parties and claims, and the 2016 action concluded with a final judgment on the merits. Therefore, the Court DISMISSES plaintiffs' claims with prejudice. (Made JS-6. Case Terminated.) Court Reporter: Not Present. (gk)

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’ JS-6
2:17-cv-04512-CAS(PLAx)
Date August 30, 2017
EDWARD J. PIERCE ET AL. v. WILMINGTON SAVINGS FUND
SOCIETY, FSB ET AL.

Present: The Honorable 

CHRISTINA A. SNYDER 

Attorneys Present for Plaintiffs: 

N/A 

Tape No.

Attorneys Present for Defendants: 

Not Present 

Not Present

Catherine Jeang 
Deputy Clerk 

Proceedings:

Not Present 
Court Reporter / Recorder

  (In Chambers:) ORDER DISMISSING CASE FOR LACK OF
SUBJECT MATTER JURISDICTION AND BECAUSE RES
JUDICATA BARS PLAINTIFFS’ CLAIMS

I.

INTRODUCTION AND BACKGROUND

On June 22, 2017, plaintiffs Edward Pierce and Jeannie Hobert filed the complaint
in this suit against defendants Wilmington Savings Fund Society (“Wilmington”), Mark
Turner, Mike Aleali, Tony Taylor, Michael Asatourian, and Does 1 to 10. Dkt. 4
(“Compl.”). On July 14, 2017 plaintiffs’ case was reassigned from Judge Marshall to
Judge Anderson. Dkt. 13. On August 16, 2017, Judge Anderson ordered plaintiffs to
show cause as to why they should not file a notice of related case indicating this action is
related to case no. 2:16-cv-00657 and/or case no. 2:16-cv-4205, and to show cause as to
why this action should not be dismissed for lack of subject matter jurisdiction. Dkt. 29.
On August 24, 2017, plaintiffs filed their response to the order to show cause. Dkt. 38
(“Response”).
On August 15, 2017, Aleali and Asatourian filed a motion to dismiss plaintiffs’
complaint, dkt. 19, and a motion to strike plaintiffs’ complaint for Anti-Slapp Violations,
dkt. 20. Wilmington and Turner filed a motion to dismiss plaintiffs’ complaint on August
17, 2017. Dkt. 27.
The case was transferred on August 25, 2017 to this Court as a related case to case
no. 2:16-cv-00657. Dkt. 37 (“Hobert’s 2016 action”). In Hobert’s 2016 action, Hobert
filed a similar complaint against Wilmington and Statebridge Company, LLC
(“Statebridge”) on January 29, 2016. Dkt. 1. On June 24, 2016, this Court dismissed the

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’ JS-6
2:17-cv-04512-CAS(PLAx)
Date August 30, 2017
EDWARD J. PIERCE ET AL. v. WILMINGTON SAVINGS FUND
SOCIETY, FSB ET AL.

case with prejudice for Hobert’s failure to file an amended complaint by the deadline
stated in a prior order granting defendants’ motion to dismiss. Dkt. 24.
Plaintiffs’ lawsuit in the instant action stems from the non-judicial foreclosure sale
of the subject property, located at 1903 W. 84th place, Los Angeles, California (the
“Property”), and a subsequent eviction action. Plaintiffs allege that defendants owe
plaintiffs millions of dollars because they did not respond to plaintiffs’ demand letters,
Additionally, they challenge defendants’ authority to possess the Property.
III.

LEGAL STANDARDS
1.

Subject Matter Jurisdiction

The Federal Rule of Civil Procedure 8(a) requires that “[a] pleading that sets forth
a claim for relief must contain a short and plain statement of the grounds for the court’s
jurisdiction . . . .” Fed. R. Civ. P. 8(a)(1). This District’s Local Rules further provide that
“[t]he statutory or other basis for the exercise of jurisdiction by this Court shall be plainly
stated in . . . any document invoking this Court’s jurisdiction.” Local Civil Rule 8-1.
Federal courts have subject matter jurisdiction only over matters authorized by the
Constitution and Congress. Bender v. Williamsport Area School District, 475 U.S. 534,
541 (1986). In seeking to invoke this Court’s jurisdiction, Plaintiffs bear the burden of
proving that jurisdiction exists. Scott v. Breeland, 792 F.2d 925, 927 (9th Cir. 1986).
“Title 28 U.S.C. § 1331 vests in federal district courts ‘original jurisdiction’ over
‘all civil actions arising under the Constitution, laws, or treaties of the United States.’”
Empire Healthchoice Assurance, Inc. v. McVeigh, 547 U.S. 677, 689 (2006) (quoting 28
U.S.C. § 1331). “A case ‘aris[es] under’ federal law within the meaning of § 1331 . . . if
‘a well-pleaded complaint establishes either that federal law creates the cause of action or
that the plaintiff’s right to relief necessarily depends on resolution of a substantial
question of federal law.’” Id. (quoting Franchise Tax Bd. of Cal. v. Constr. Laborers
Vacation Trust for So. Cal., 463 U.S. 1, 27-28, (1983)). The “mere presence of a federal
issue in a state cause of action” does not automatically confer federal-question
jurisdiction. Merrell Dow Pharms. Inc. v. Thompson, 478 U.S. 804, 813 (1986). If the
complaint does not specify whether a claim is based on federal or state law, it is a claim
“arising under” federal law only if it is “clear” that it raises a federal question. Duncan v.
Stuetzle, 76 F.3d 1480, 1485 (9th Cir. 1996). “Congress has given the lower federal
courts jurisdiction to hear, originally or by removal from a state court, only those cases in

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’ JS-6
2:17-cv-04512-CAS(PLAx)
Date August 30, 2017
EDWARD J. PIERCE ET AL. v. WILMINGTON SAVINGS FUND
SOCIETY, FSB ET AL.

which a well-pleaded complaint establishes either that federal law creates the cause of
action or that the plaintiff’s right to relief necessarily depends on resolution of a
substantial question of federal law.” Franchise Tax Bd. v. Constr. Laborers Vacation
Trust, 463 U.S. 1, 27, 28 (1983). The “well-pleaded complaint” rule “severely limits the
number of cases in which state law ‘creates the cause of action’ that may be initiated in or
removed to federal district court.” Id. at 9, 10. A case may arise under federal law
“where the vindication of a right under state law necessarily turned on some construction
of federal law.” Id. at 9. “[F]ederal jurisdiction demands not only a contested federal
issue, but a substantial one, indicating a serious federal interest in claiming the
advantages thought to be inherent in a federal forum.” Grable & Sons Metal Prods., Inc.
v. Darue Eng’g & Mfg., 545 U.S. 308, 313 (2005).
The absence of a federal cause of action is a relevant factor to be considered in
assessing whether a federal issue is substantial. Id. at 318; Merrell Dow, 478 U.S. at 81112. Merely using the potential violation of a federal statute to form part of the basis for a
state law cause of action does not transform the cause of action into a federal claim.
Merrell Dow, 478 U.S. at 811-12. Such references to federal violations to support state
law causes of action do not support federal jurisdiction:
One only needed to consider the treatment of federal violations generally
in garden variety state tort law. . . . A general rule of exercising federal
jurisdiction over state claims resting on federal mislabeling and other
statutory violations would thus have heralded a potentially enormous shift
of traditionally state cases into federal courts. Expressing concern over
the “increased volume of federal litigation,” and noting the importance of
adhering to “legislative intent,” Merrell Dow thought it improbable that
the Congress, having made no provision for a federal cause of action,
would have meant to welcome any state-law tort case implicating federal
law “solely because the violation of the federal statute is said to [create] a
rebuttable presumption [of negligence] . . . under state law.”
Grable & Sons, 545 U.S. at 318, 319 (alterations in original) (quoting Merrell Dow, 478
U.S. at 811, 812). In many situations, where the violation of a federal statute is one of
several independent allegations supporting a state law cause of action, courts have
determined that the state law cause of action does not “necessarily turn” on the
construction of the federal statute. Rains v. Criterion Sys., Inc., 80 F.3d 339, 345-46 (9th

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’ JS-6
2:17-cv-04512-CAS(PLAx)
Date August 30, 2017
EDWARD J. PIERCE ET AL. v. WILMINGTON SAVINGS FUND
SOCIETY, FSB ET AL.

Cir. 1996); see also id. at 346 (“When a claim can be supported by alternative and
independent theories—one of which is a state law theory and one of which is a federal
law theory—federal question jurisdiction does not attach because federal law is not a
necessary element of the claim.”).
2.

Res Judicata

Under the federal doctrine of claim preclusion, or res judicata, “a final judgment on
the merits of an action precludes the parties or their privies from relitigating issues that
were or could have been raised in that action.” Allen v. McCurry, 449 U.S. 90, 93
(1980). “Claim preclusion is a broad doctrine that bars bringing claims that were
previously litigated as well as some claims that were never before adjudicated.”
Clements v. Airport Auth. of Washoe County, 69 F.3d 321, 327 (9th Cir. 1995).
In order for the Court’s judgment of dismissal of Hobert’s 2016 federal action to
have preclusive effect here, the adjudication must have (1) involved the same “claim” as
this suit; (2) have reached a final judgment on the merits; and (3) have involved the same
parties or their privies. Blonder-Tongue Labs. v. Univ. of Ill. Found., 402 U.S. 313, 32324 (1971); Nordhorn v. Ladish Co., Inc., 9 F.3d 1402 (9th Cir. 1993). In conducting
claim preclusion analysis, “[t]he fact that res judicata depends on an ‘identity of claims’
does not mean that an imaginative attorney may avoid preclusion by attaching a different
legal label to an issue that has, or could have, been litigated [in the previous action]....
Newly articulated claims based on the same nucleus of facts may still be subject to a res
judicata finding if the claims could have been brought in the earlier action.” TahoeSierra Pres. Council, Inc. v. Tahoe Reg'l Planning Agency, 322 F.3d 1064, 1077–78 (9th
Cir. 2003) (emphasis added).
IV.

DISCUSSION

As explained in the following analysis, the Court lacks subject matter jurisdiction
over the instant lawsuit. Additionally, res judicata bars the instant lawsuit.
A.

Lack of Subject Matter Jurisdiction

Plaintiffs allege that the Court “has [j]urisdiction because this [c]ase is arising
under Federal violations of Title 33 U.S.C. Section 931” and “jurisdiction is invoked
pursuant to 18 U.S.C. Section 1341” and “42 U.S.C. Section 1983 for continuing

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’ JS-6
2:17-cv-04512-CAS(PLAx)
Date August 30, 2017
EDWARD J. PIERCE ET AL. v. WILMINGTON SAVINGS FUND
SOCIETY, FSB ET AL.

violations of Plaintiff’s inalienable rights under UCC 1-308.” Compl. at 3. Despite these
allegations, the complaint only alleges state law claims for: (1) breach of contract; (2)
fraud; (3) quiet title; and (4) injunctive relief. Plaintiffs’ response to Judge Anderson’s
order to show cause merely repeats these allegations, and adds that jurisdiction is also
proper because Wilmington is a federal bank.1 Response at 2, 5–7.
Plaintiffs’ references to 18 U.S.C. § 1341, 33 U.S.C. § 931, and 42 U.S.C. § 1983
do not establish the Court’s subject matter jurisdiction because the complaint does not
actually allege a claim under any of these federal laws. Instead, plaintiffs’ allegations are
based on state law causes of action.
Additionally, 18 U.S.C. § 1341, 33 U.S.C. § 931, and 42 U.S.C. § 1983 do not
provide plaintiffs with a viable federal claim in this action. Specifically, § 1341 is a
criminal statute that does not confer a private right of action. Watkins v. Proulx, 235
Fed. Appx. 678, 679 (9th Cir. 2007); Wilcox v. First Interstate Bank, N.A., 815 F.2d 522,
533 n.1 (9th Cir. 1987); Wenzoski v. Citicorp, 480 F.Supp. 1056, 1062 (N.D. Cal. 1979).
Therefore, plaintiffs may not assert liability on the basis of this statute. Haney v. Cal-W.
Reconveyance Corp., No. SACV 10-1052 DOC, 2011 WL 2472244, at *2 (C.D. Cal.
June 21, 2011). Accordingly, § 1341 cannot serve as the basis for federal question
jurisdiction. Reynolds v. Wilkerson, No. 13-CV-04855-LHK, 2014 WL 4062771, at *4
(N.D. Cal. Aug. 14, 2014) (citation omitted).
Similarly, plaintiffs’ references to 33 U.S.C. § 931 and 42 U.S.C. § 1983 do not
create viable federal claims, because no claim is actually alleged and any claim would not
be viable as a matter of law because this action does not involve the Longshore and
Harbor Workers’ Compensation Act for purposes of 33 U.S.C. § 931, and there is no
state action as required for 42 U.S.C. § 1983.
In sum, plaintiffs allege causes of action for breach of contract, fraud, quiet title,
and injunctive relief under state law. Plaintiffs’ references to 18 U.S.C. § 1341, 33
U.S.C. § 931, and 42 U.S.C. § 1983 do not transform the state law causes of action into
federal questions or create federal jurisdiction. The Court therefore DISMISSES
plaintiffs’ claims for lack of subject matter jurisdiction.

1

It is unclear whether plaintiffs contend that subject matter jurisdiction is based
upon diversity of citizenship. Yet insofar as plaintiffs may allege diversity jurisdiction,
for the reasons stated herein, their claims are barred by res judicata.

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’ JS-6
2:17-cv-04512-CAS(PLAx)
Date August 30, 2017
EDWARD J. PIERCE ET AL. v. WILMINGTON SAVINGS FUND
SOCIETY, FSB ET AL.

B.

Res Judicata

In Hobert’s 2016 related action, the Court dismissed Hobert’s claims with
prejudice for failure to file an amended complaint by the Court’s deadline that was
specified in its order granting defendants’ motion to dismiss. Hobert’s claims stemmed
from the same underlying circumstances as the instant complaint. Hobert borrowed a
$410,000 loan in 2007, which was secured by a Deed of Trust to the Property described
previously. On May 15, 2015, a notice of default was recorded and foreclosure
proceedings were initiated against the Property. The default remained uncured, and title
was transferred to Wilmington by way of credit bid on October 2, 2015. Hobert filed a
complaint against Wilmington and Statebridge and alleged claims under the Fair Credit
Reporting Act and the Fair Debt Collections Practices Act, in addition to claims under
state tort law. On May 24, 2016, the Court granted defendants’ motion to dismiss for
failure to state a claim, and on June 24, 2016 the Court dismissed the case with prejudice.
Plaintiffs filed the instant action against Wilmington and its attorneys for failure to
respond to plaintiffs’ “Commercial Affidavit Contracts.” Compl. ¶ 8. Plaintiffs allege
they are suing Wilmington in its professional capacity, Turner in his personal and
professional capacity, and all other named defendants in their personal capacities because
the defendants collectively failed to provide evidence that they had authority to possess
the subject Property. Id. ¶ 14.
In order for Hobert’s 2016 action to have preclusive effect, its adjudication must
have involved the same claim as the instant action. Hobert’s 2016 action challenged the
foreclosure proceedings with respect to the Property, while in the instant lawsuit,
plaintiffs challenge defendants’ authority to possess the Property that was the subject of
the very same foreclosure proceedings. Accordingly, plaintiffs’ claims involve the “same
nucleus of facts” and could have been brought in Hobert’s 2016 action. See Tahoe-Sierra
Pres. Council, 322 F.3d at 1077–78. Plaintiffs may not simply attach different legal
labels to the very same foreclosure issue that was previously litigated in Hobert’s 2016
action. Therefore, the Court concludes that plaintiffs’ instant claims involve the same
claims as Hobert’s 2016 related action.
As articulated, the Court dismissed without prejudice Hobert’s 2016 action after a
detailed analysis of the merits of Hobert’s claims. The Court analyzed Hobert’s claims
for violations of the Fair Credit Reporting Act and Fair Debt Collections Practices Act, in

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’ JS-6
2:17-cv-04512-CAS(PLAx)
Date August 30, 2017
EDWARD J. PIERCE ET AL. v. WILMINGTON SAVINGS FUND
SOCIETY, FSB ET AL.

addition to state law claims for invasion of privacy and for negligent, wanton, and/or
intentional hiring and supervision of incompetent employees or agents. Based on this
analysis, the Court concluded that Hobert failed to state a claim upon which relief could
be granted. When Hobert failed to amend her complaint to cure its deficiencies by the
Court’s stated deadline, the action was dismissed with prejudice. Therefore, the Court’s
dismissal of Hobert’s 2016 related action constituted a final judgment on the merits.
“A person who was not a party to a suit generally has not had a ‘full and fair
opportunity to litigate’ the claims and issues settled in that suit.” Taylor v. Sturgell, 553
U.S. 880, 892 (2008) (citations omitted). However, “[e]ven when the parties are not
identical, privity may exist if there is substantial identity between parties, that is, when
there is sufficient commonality of interest.” Tahoe-Sierra Pres. Council, 322 F.3d at 1081
(citations omitted). A nonparty preclusion may be justified based on certain pre-existing
substantive legal relationships, and this exception originates from the needs of property
law. Taylor, 553 U.S. at 894.
In Hobert’s 2016 action, Hobert named Wilmington and Statebridge as defendants.
In the instant action, Hobert and Pierce name Wilmington, its CEO, and its attorneys as
defendants. Pierce’s relationship to Hobert and to the Property is not clear from the face
of the complaint. However, Aleali and Asatourian contend in their motion to dismiss that
after Wilmington obtained a judgment of possession regarding the Property in January
2016, Pierce filed a post-judgment motion for relief on May 2, 2016, claiming an
ownership interest in the Property.2 Dkt. 19 (citing Request for Judicial Notice Ex. 14,
dkt. 21). Pierce and Hobert were subsequently evicted from the property. Hobert’s 2016

2

Federal Rule of Evidence 201 authorizes a court to take judicial notice of “matters
of public record,” Mack v. S. Bay Beer Distrib., 798 F.2d 1279, 1282 (9th Cir. 1986),
abrogated on other grounds by Astoria Fed. Sav. & Loan Ass'n v. Solimino, 501 U.S. 104
(1991), or any other “adjudicative” facts, which are “facts concerning the immediate
parties.” See United States v. Gould, 536 F.2d 216, 219 (8th Cir. 1976); In re
Homestore.com, Inc. Sec. Lit., 347 F. Supp. 2d 814, 816–17 (C.D. Cal. 2004).
Accordingly, the Court judicially notices Ex. 14, dkt. 21, which is a County of Los
Angeles Superior Court notice of ruling on the post judgment claim of Edward J. Pierce,
case no. 15U15056. This ruling notes that Pierce claimed to be the owner of the Property
at issue in the instant action.

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’ JS-6
2:17-cv-04512-CAS(PLAx)
Date August 30, 2017
EDWARD J. PIERCE ET AL. v. WILMINGTON SAVINGS FUND
SOCIETY, FSB ET AL.

action stemmed from the foreclosure regarding the Property, and similarly, the instant
action also stems from this foreclosure. Hobert, as plaintiff with an ownership interest in
the Property, has a sufficient commonality of interest to Pierce, who also claims an
ownership interest in the Property. Pierce is, accordingly, in privity with Hobert by
virtue of their common ownership interest in the Property. Therefore, Hobert’s 2016
action and the instant action share the same parties and privies.
The Court finds that res judicata bars plaintiffs’ instant action. The instant action
is precluded by Hobert’s 2016 action because both lawsuits share the same parties and
claims, and the 2016 action concluded with a final judgment on the merits. Therefore,
the Court DISMISSES plaintiffs’ claims with prejudice.
V.

CONCLUSION

In accordance with the foregoing, the Court DISMISSES plaintiffs’ claims with
prejudice.
IT IS SO ORDERED.
Initials of Preparer

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                     CMJ 

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