Stephen H Johnson et al v. JPMorgan Chase Bank NA et al
Filing
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ORDER GRANTING DEFENDANT'S MOTION TO DISMISS 13 by Judge Dean D. Pregerson. For the reasons stated above, Defendant's Motion to Dismiss is GRANTED. The FAC is DISMISSED, with prejudice. ( MD JS-6. Case Terminated ) (lom)
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UNITED STATES DISTRICT COURT
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CENTRAL DISTRICT OF CALIFORNIA
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STEPHEN H. JOHNSON, PAULA A.
JOHNSON,
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Plaintiffs,
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v.
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JPMORGAN CHASE BANK NA.,
Defendant.
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___________________________
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Case No. EDCV 15-02609 DDP (JEMx)
ORDER GRANTING DEFENDANT’S MOTION
TO DISMISS
[Dkt. 13]
Presently before the court is Defendant JPMorgan Chase Bank,
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N.A.’s Motion to Dismiss.
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parties, the court grants the motion and adopts the following
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Order.
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I.
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Having considered the submissions of the
Background
Plaintiffs Stephen and Paula Johnson (“Plaintiffs”) filed an
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action against Defendant JPMorgan Chase Bank, N.A. (“Defendant”) in
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the San Bernardino County Superior Court in March 2014. (Case No.
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5:14-cv-00777-DDP-JEMx, the “First Action”). The case was later
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removed to this court. In the First Action, Plaintiffs alleged that
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Defendant did not have standing to initiate foreclosure proceedings
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against Plaintiffs’ property because Defendant did not acquire the
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right to enforce a deed of trust that was executed as part of
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Plaintiffs’ refinancing of their home in November 2006. (First
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Action Dkt. No. 1.) Plaintiffs alleged five causes of action: “(1)
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Quiet Title; (2) Violations of Business and Professions Code
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section 17200, et seq.; (3) Quasi-Contract; (4) Negligence; and (5)
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Wrongful Foreclosure. (Id.) Defendant filed a motion to dismiss
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Plaintiffs’ Complaint, which this Court granted. (First Action Dkt.
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No. 21.) Plaintiffs filed a motion to set aside the judgment, which
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the Court denied. (First Action Dkt. No. 29.)
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Plaintiffs then filed a second state court action against
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Defendant.
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The case, like its predecessor, was then removed to this Court. In
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the Second Action, Plaintiffs alleged the same underlying facts as
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the First Action and brought a claim for Quiet Title. (Second
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Action Dkt. No. 12.) Defendant filed a motion to dismiss
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Plaintiffs’ First Amended Complaint on res judicata grounds and the
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court granted the motion.
(Case No. 5:14-cv-01372-DDP-JEMx, the “Second Action”).
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Plaintiffs then filed the instant action in this Court (the
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“Third Action)” against Defendant, alleging causes of action for
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violation of the Truth in Lending Act (“TILA”), quiet title, and
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“cancellation of instrument.”
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(“FAC”) alleges the same underlying facts as the First and Second
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Actions, and bring a single claim for declaratory relief pursuant
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to TILA and based upon a Notice of Rescission allegedly sent to
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Defendant in July 2015. Defendant now moves to dismiss the FAC.
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II.
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Plaintiffs’ First Amended Complaint
Legal Standard
A complaint will survive a motion to dismiss when it contains
“sufficient factual matter, accepted as true, to state a claim to
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relief that is plausible on its face.”
Ashcroft v. Iqbal, 556 U.S.
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662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544,
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570 (2007)).
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“accept as true all allegations of material fact and must construe
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those facts in the light most favorable to the plaintiff.”
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v. Hayes, 213 F.3d 443, 447 (9th Cir. 2000).
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need not include “detailed factual allegations,” it must offer
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“more than an unadorned, the-defendant-unlawfully-harmed-me
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accusation.”
When considering a Rule 12(b)(6) motion, a court must
Iqbal, 556 U.S. at 678.
Resnick
Although a complaint
Conclusory allegations or
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allegations that are no more than a statement of a legal conclusion
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“are not entitled to the assumption of truth.” Id. at 679.
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other words, a pleading that merely offers “labels and
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conclusions,” a “formulaic recitation of the elements,” or “naked
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assertions” will not be sufficient to state a claim upon which
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relief can be granted.
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quotation marks omitted).
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In
Id. at 678 (citations and internal
“When there are well-pleaded factual allegations, a court should
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assume their veracity and then determine whether they plausibly
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give rise to an entitlement of relief.” Id. at 679.
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must allege “plausible grounds to infer” that their claims rise
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“above the speculative level.” Twombly, 550 U.S. at 555.
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“Determining whether a complaint states a plausible claim for
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relief” is a “context-specific task that requires the reviewing
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court to draw on its judicial experience and common sense.”
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556 U.S. at 679.
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III. Discussion
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Plaintiffs
Iqbal,
Defendant contends that this action, like the Second Action
before it, is barred by the doctrine of res judicata.
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Res judicata
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“bars litigation in a subsequent action of any claims that were
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raised or could have been raised in the prior action.” Owens v.
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Kaiser Foundation Health Plan, Inc. 244 F.3d 708, 713 (9th Cir.
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2001); W. Radio Servs. Co. v. Glickman, 123 F.3d 1189, 1192 (9th
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Cir. 1997). It applies when there is “1) [an] identity of claims,
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2) a final judgment on the merits, and 3) identity or privity
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between the parties.” W. Radio Servs. Co., 123 F.3d at 1192.
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A.
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The Ninth Circuit relies on four factors to determine if there
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Identity of Claims
is an identity of claims. The factors are
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(1) whether rights or interests established in the prior
judgment would be destroyed or impaired by prosecution of
the second action; (2) whether substantially the same
evidence is presented in the two actions; (3) whether the
two suits involve infringement of the same right; and (4)
whether the two suits arise out of the same transactional
nucleus of facts.
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Harris v. Jacobs, 621 F.2d 341, 343 (9th Cir. 1980); Constantini v.
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Trans World Airlines, 681 F.2d 1199, 1201-02 (9th Cir. 1982).
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The central issue in determining whether there is an identity
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of claims is whether the two suits “arise out of the same
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transactional nucleus of facts.” Costantini, 681 F.2d at 1202; see
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also Frank v. United Airlines, Inc., 216 F.3d 845, 851 (9th Cir.
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2000).
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often sufficient to find an identity of claims for res judicata
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without analysis of the other factors.
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Bank, No. 11-CV-02920, 2011 WL 6002599, at *8 (N.D. Cal. Nov. 30,
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2011); see Int’l Union of Operating Eng’rs-Employers Constr. Indus.
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Pension, Welfare and Training Trust Funds v. Karr, 994 F.2d 1426,
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1430 (9th Cir. 1993).
Indeed, satisfaction of the fourth Constantini factor is
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Quinto v. JPMorgan Chase
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When analyzing this factor, courts ask “whether [the two
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actions] are related to the same set of facts and whether they
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could conveniently be tried together.” W. Systems, Inc. v. Ulloa,
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958 F.2d 864, 871 (9th Cir. 1992).
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the same nucleus of facts; all three actions allege that Defendant
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cannot proceed with a foreclosure of the property or enforcement of
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the underlying debt obligation because Defendant lacks interest in
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Plaintiffs’ loan as the result of errors in the process of
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assigning the deed of trust and promissory note.
Here, the three actions involve
Claims for quiet
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title and declaratory relief could conveniently be tried together
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because Plaintiffs’ allegations about improper loan assignment
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would be central to both causes of action.
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now base their declaratory relief action for a TILA violation upon
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a July 2015 Notice of Rescission, the underlying facts are the same
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as contained in an earlier, April 2012 Notice of Rescission, which
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was allegedly sent to Defendant prior to the filing of the Second
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Action. See Owens, 244 F.3d at 714 (upholding dismissal on res
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judicata grounds on claims not previously raised where the new
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claims were based on the same predicate facts).
Even though Plaintiffs
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Although the similarity of the nuclei of facts would alone be
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reason to find an identity of claims, the other three factors also
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suggest an identity of claims.
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interests as established in the prior litigation could be destroyed
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or impaired by the prosecution of this action, as Defendant will
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not be allowed to continue foreclosure proceedings or recover on
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the debt obligation for the duration of the lawsuit, if ever.
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First, Defendant’s rights and
Second, the evidence needed to prove Plaintiffs’ cause of
action for declaratory relief for a TILA violation centers around
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the assignment of the original lender’s deed of trust to Defendant.
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Plaintiffs could use the same evidence to prove that Defendant
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lacks the ability to enforce the promissory note or deed of trust
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in an action for declaratory relief that would have been needed in
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the earlier actions for quiet title based on the same, allegedly
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improper assignment.1
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Third, all three actions involve the alleged wrongful
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foreclosure. Plaintiffs’ claim the right at issue in the instant
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action is not the same as that presented by the earlier actions
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because the TILA violation alleged here is based on Defendant’s
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failure to adequately respond to the July 2015 Notice of Rescission
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within the 20 days required by statute.
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mailed a similar notice in April 2012, and thus, could have brought
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the TILA violation for declaratory relief in the Second Action.
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(Third Action Dkt. No. 12 at 8:9-17.)
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to assert that they sent both notices because they allege that
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Defendant has no interest in the promissory note and deed of trust,
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which is important for both the quiet title and declaratory relief
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claims, Plaintiffs do not explain why both causes of action could
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not have been brought at the same time. See United States v.
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Liquidators of European Fed. Credit Bank, 630 F.3d 1139, 1151 (9th
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Cir. 2011) (finding that if the new claim “arose at the same time
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as the harm alleged in the previous action, then there is no reason
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why the plaintiff could not have brought the claim in the first
Plaintiffs, however,
Although Plaintiffs appear
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Such evidence might include, for example, documentssuch as a
Property Securitization Analysis Report that was filed in the
Second Action. (Second Action Dkt. Nos. 12 at 35-44 and 12-1.)
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action . . . [t]he plaintiff simply could have added a claim to the
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complaint”) (citation omitted).
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Accordingly, the identity of claims factor of the res judicata
test is satisfied.
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B.
Final Judgment on the Merits
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There was a final judgment on the merits of both the First and
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Second Actions.
The First Action was dismissed with prejudice
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after Plaintiffs failed to oppose Defendant’s motion to dismiss.
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The Federal Rules of Civil Procedure provide that, unless otherwise
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specified, a dismissal for failure to prosecute or to comply with a
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court order “operates as an adjudication on the merits.” Fed. R.
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Civ. P. 41(b); see Stewart v. U.S. Bancorp, 297 F.3d 953, 956 (9th
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Cir. 2002); Owens, 244 F.3d at 714; In re Schimmels, 127 F.3d 875,
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884 (9th Cir. 1997)(“[I]nvoluntary dismissal generally acts as a
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judgment on the merits for the purposes of res judicata”); Johnson
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v. United States Dep't of Treasury, 939 F.2d 820, 825 (9th Cir.
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1991) (noting that dismissal for failure to prosecute is “treated
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as an adjudication on the ‘merits’ for purposes of preclusion”)
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(citation omitted).
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adjudicated on the merits, the Second Action was dismissed based on
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res judicata grounds after Plaintiffs opposed Defendant’s Motion to
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Dismiss and filed a Motion to Remand, which was denied. (Second
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Action Dkt. No. 21.)
Even if the First Action had not been
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C.
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Lastly, there is no dispute that there is an identity of
Identity of Parties
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parties. Plaintiffs and Defendant were parties to both the First
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and Second Actions.
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Thus, because there is “1) [an] identity of claims, 2) a final
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judgment on the merits, and 3) identity or privity between the
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parties” here and in the prior actions, the doctrine of res
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judicata applies, and Plaintiffs’ FAC must be dismissed.
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Servs. Co., 123 F.3d at 1192.
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IV.
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W. Radio
Conclusion
For the reasons stated above, Defendant’s Motion to Dismiss is
GRANTED.
The FAC is DISMISSED, with prejudice.
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IT IS SO ORDERED.
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Dated: August 1, 2016
DEAN D. PREGERSON
United States District Judge
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