Irma Castillo et al v. MTC Financial, Inc et al

Filing 25

ORDER by Judge Andrew J. Guilford remanding case to Superior Court of California, County of Orange, Case number 30-02016-00841019-CU-OR-CJC. The Court REMANDS the Castillo case back to the Orange County Superior Court, for lack of subject matter jurisdiction. (SACV 17-00480 AG (KESx).) The Court GRANTS Chase's motion to dismiss Curtis' complaint WITHOUT LEAVE TO AMEND. (SACV 17-00478 AG (JDEx), Dkt. No. 14.) A short judgment will be issued against Curtis and for Defendants. (see document for details). Case Terminated. Made JS-6 (dro)

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

SACV 17-00480 AG (KESx); and
SACV 17-00478 AG (JDEx)

Title

IRMA CASTILLO ET AL. v. MTC FINANCIAL, INC. ET AL.; and
CAROL CURTIS ET AL. v. MTC FINANCIAL, INC. ET AL.

Present: The
Honorable

June 7, 2017

ANDREW J. GUILFORD

Lisa Bredahl
Deputy Clerk
Attorneys Present for Plaintiffs:
Proceedings:

Date

Not Present
Court Reporter / Recorder

Tape No.

Attorneys Present for Defendants:

[IN CHAMBERS] ORDER REMANDING CASTILLO CASE
AND GRANTING MOTION TO DISMISS CURTIS CASE

Both of these cases began in state court when several plaintiffs sued Defendants MTC
Financial Inc. (“MTC”) and JPMorgan Chase, N.A. (“Chase”), among others, for foreclosure
related claims. Defendants multifurcated the case so plaintiffs had to individually proceed
against Defendants. Next, Defendants changed the venue for some of those severed cases,
depending on the location of each subject property. Defendants then removed both of these
cases to this Court, invoking the Court’s federal question jurisdiction. And now, each
Defendant moves to dismiss this case under Federal Rule of Civil Procedure 12(b)(6).
1.

LEGAL STANDARD

A court will grant a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) if the
complaint does not allege claims upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). A
complaint must contain “a short and plain statement of the claim showing that the pleader is
entitled to relief.” Fed. R. Civ. P. 8(a)(2). A claim for relief must be plausible on its face. Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A claim has facial plausibility when the
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

SACV 17-00480 AG (KESx); and
SACV 17-00478 AG (JDEx)

Date

June 7, 2017

Title

IRMA CASTILLO ET AL. v. MTC FINANCIAL, INC. ET AL.; and
CAROL CURTIS ET AL. v. MTC FINANCIAL, INC. ET AL.

plaintiff pleads factual content that allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal , 556 U.S. 662, 678 (2009). In
analyzing the complaint’s sufficiency, a court must “accept[] all factual allegations in the
complaint as true and constru[e] them in the light most favorable to the nonmoving party.”
Skilstaf, Inc. v. CVS Caremark Corp., 669 F.3d 1005, 1014 (9th Cir. 2012).
In dismissing a complaint, a court must also determine whether the plaintiff should be
granted leave to amend. “A district court may deny a plaintiff leave to amend if it determines
that allegation of other facts consistent with the challenged pleading could not possibly cure
the deficiency or if the plaintiff had several opportunities to amend its complaint and
repeatedly failed to cure deficiencies.” Telesaurus VPC, LLC v. Power, 623 F.3d 998, 1003 (9th
Cir. 2010) (internal citation omitted). See also, Steckman v. Hart Brewing, 143 F.3d 1293, 1298
(9th Cir. 1998) (holding that pleadings may be dismissed without leave to amend if
amendment “would be an exercise in futility.”).
2.

ANALYSIS

As a preliminary point, the Court has taken judicial notice of all documents that may be
properly judicially noticed. Now, the Court first turns to Irma and Pedro Castillo’s complaint
before analyzing Curtis’ complaint.
2.1.

The Castillos’ Case

There are some issues with the way the Castillos are prosecuting their case. First, the
Castillos have failed to file an opposition against either of the motions pending against them,
even though the Court continued the hearing date for MTC’s motion to dismiss. In the
Central District of California, an “opposing party” must submit an opposition or a statement
that the party won’t oppose the motion. C.D. Cal. L.R. 7-9. “The failure to file any required
document, or the failure to file it within the deadline, may be deemed consent to the granting
or denial of the motion.” C.D. Cal. L.R. 7-12. But that problem is trumped by another issue.
CIVIL MINUTES - GENERAL
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

SACV 17-00480 AG (KESx); and
SACV 17-00478 AG (JDEx)

Date

June 7, 2017

Title

IRMA CASTILLO ET AL. v. MTC FINANCIAL, INC. ET AL.; and
CAROL CURTIS ET AL. v. MTC FINANCIAL, INC. ET AL.

That other issue is that the first amended complaint (“FAC”) should be the operative
complaint here but the Castillos’ name appears solely in the caption of that complaint. When
the plaintiffs were in state court, they were all represented by an attorney. Then their attorney
was suspended from the practice of law and some of the plaintiffs obtained new counsel and
filed the FAC. Curtis was among those plaintiffs, but the Castillos weren’t. So now, no
description of the Castillos, their property, or their claims appear in the body of the FAC.
Thus, it appears that the operative complaint for the Castillos has to be their original
complaint. (Dkt. No. 1-2.) This creates a problem that Defendants seem to be ignoring: the
Court has no subject matter jurisdiction over the Castillos’ case. Under the “well-pleaded
complaint rule, . . . federal jurisdiction exists only when a federal question is presented on the
face of the plaintiff’s properly pleaded complaint.” Caterpillar, Inc. v. Williams, 482 U.S. 386,
392 (1987). The FAC states some federal claims but the original complaint only alleges state
law claims. And the basis of the removal here was federal question jurisdiction, along with
supplemental jurisdiction. So the Castillo case has to be remanded to the state court for lack
of subject matter jurisdiction.
2.2.

The Curtis Case

Curtis also has an issue with properly prosecuting the case, although a minor one compared
to the Castillos. Curtis’ opposition to Chase’s motion to dismiss was filed a week late. And as
already stated, filing a late opposition may be deemed consent to granting this motion against
Curtis. C.D. Cal. L.R. 7-12. But the Court will still address some of the merits of Chase’s
motion here.
First, there is the issue of multiple pending motions. At oral arguments, there was some
confusion about whether the Court had addressed what was to happen with MTC’s motion
to dismiss. But the Court’s tentative had actually and explicitly addressed that issue: “Since
Chase’s argument regarding claim preclusion disposes of the entire case, it’s unnecessary to
CIVIL MINUTES - GENERAL
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

SACV 17-00480 AG (KESx); and
SACV 17-00478 AG (JDEx)

Date

June 7, 2017

Title

IRMA CASTILLO ET AL. v. MTC FINANCIAL, INC. ET AL.; and
CAROL CURTIS ET AL. v. MTC FINANCIAL, INC. ET AL.

address the rest of Chase’s arguments and MTC’s motion to dismiss.” The Court’s
conclusion that Chase’s motion should be dispositive of the entire case was further bolstered
during oral arguments when it was conceded that Curtis had no substantive response to
dismissing the case against MTC as well. The Court now turns to Chase’s motion to dismiss.
Chase argues that Curtis’ claims are barred under the doctrine of claim preclusion. “Res
judicata, or claim preclusion, prohibits lawsuits on any claims that were raised or could have
been raised in a prior action.” Stewart v. Bancorp, 297 F.3d 953, 956 (9th Cir. 2002) (emphasis
in original) (internal quotation marks omitted). The elements of claim preclusion are “(1) an
identity of claims, (2) a final judgment on the merits, and (3) privity between parties.”
Headwaters Inc. v. United States Forest Serv., 399 F.3d 1047, 1052 (9th Cir. 2005). State law
applies to determine the preclusive effect of a state court ruling. Robi v. Five Platters, Inc., 838
F.2d 318, 322 (9th Cir. 1988). And in California, claim preclusion bars any claims based on
the same primary rights. See Goddard v. Security Title Ins. & Guarantee Co., 14 Cal.2d 47, 52, 54
(1939).
The second and third elements are easily met here. In 2011, Curtis, along with over 400 other
plaintiffs, sued Defendants in the case Potter et al. v. JPMorgan Chase Bank, N.A., et al., Los
Angeles Superior Court, Case No. BC459627. That action involved the same property and
deed of trust at issue in this case. In the 2011 case, Curtis alleged that Defendants wrongfully
duped Curtis into obtaining their loans and wrongfully transferred the loans, among other
things. The 2011 case reached a final decision on the merits sufficient for preclusive effects
to apply. The case was dismissed after the state court considered a fourth amended
complaint. And final judgment was entered against plaintiffs. (Dkt. No. 16-8); see Fed. R. Civ.
P. 41(b) (Any dismissal “except one for lack of jurisdiction, improper venue, or failure to join
a party . . . operates as an adjudication on the merits,” unless the dismissal order states
otherwise.).
Curtis argues that the first element isn’t met because the notice of default wasn’t even
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

SACV 17-00480 AG (KESx); and
SACV 17-00478 AG (JDEx)

Date

June 7, 2017

Title

IRMA CASTILLO ET AL. v. MTC FINANCIAL, INC. ET AL.; and
CAROL CURTIS ET AL. v. MTC FINANCIAL, INC. ET AL.

recorded until 2015 so it couldn’t have been the subject of litigation in 2011. But while that is
true, almost all of the claims in the FAC revolve around the invalidity of the deed of trust, not
the invalidity of the notice of default. The only claim in the FAC that relies on a faulty notice
of default is claim 5—Cancellation of Instrument. Only part of that claim can survive claim
preclusion. Curtis wants cancellation of the deed of trust, cancellation of the assignment of
the deed of trust, and cancellation of the notice of default. The cancellation of the deed of
trust and its assignment are precluded since those could have and were the subject of
litigation in the 2011 case, but the cancellation of the notice of default is not precluded.
Thus, the only claim left standing is a claim for the cancellation of the notice of default.
But that claim cannot stand alone. Cancellation of an instrument is an equitable remedy.
Both parties agree that tender is generally required for the equitable remedy of cancellation
of instruments. See Fleming v. Kagan, 189 Cal.App.2d 791, 796 (1961). Curtis states that there is
an exception to the tender requirement when a plaintiff alleges that the deed of trust, which
gives the power to execute a nonjudicial foreclosure, is void. But as already stated, Curtis is
precluded from claiming that the deed of trust is void. Thus, that exception doesn’t apply
here. And since Curtis doesn’t allege that she tendered or is presently able to tender the full
debt due for the subject property, the cancellation of instrument claim fails as well. See
Aguilar v. Bocci, 39 Cal.App.3d 475, 478 (1974).
In sum, all claims in Curtis’ FAC fail and amendment would be futile. See Steckman, 143 F.3d
at 1298.
3.

DISPOSITION

The Court REMANDS the Castillo case back to the Orange County Superior Court, for
lack of subject matter jurisdiction. (SACV 17-00480 AG (KESx).)

CIVIL MINUTES - GENERAL
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

SACV 17-00480 AG (KESx); and
SACV 17-00478 AG (JDEx)

Date

June 7, 2017

Title

IRMA CASTILLO ET AL. v. MTC FINANCIAL, INC. ET AL.; and
CAROL CURTIS ET AL. v. MTC FINANCIAL, INC. ET AL.

The Court GRANTS Chase’s motion to dismiss Curtis’ complaint WITHOUT LEAVE TO
AMEND. (SACV 17-00478 AG (JDEx), Dkt. No. 14.) A short judgment will be issued
against Curtis and for Defendants.

:
Initials of Preparer

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