Beavers v. New Penn Financial, LLC, et al.

Filing 42

ORDER DENYING 35 Defendants' Motion to Strike, signed by Magistrate Judge Jennifer L. Thurston on 1/11/2018. (Hall, S)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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KENNETH G. BEAVERS,
Plaintiff,

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v.

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NEW PENN FINANCIAL LLC, dba
SHELLPOINT MORTAGE SERVICING;
RESURGENT CAPITAL SERVICES LP;
RESURGENT MORTGAGE SERVICING;
FEDERAL HOME LOAN MORTGAGE
CORPORATION; and DOES 1-50,

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Defendants.
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Case No.: 1:17-cv-00747 - JLT
ORDER DENYING DEFENDANTS’ MOTION
TO STRIKE
(Doc. 35)

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Kenneth Beavers asserts the defendants are liable for wrongful actions related to processing his

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applications for loan modification and the foreclosure of his home. Defendants seek to strike portions

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of the of the Second Amended Complaint pursuant to Rule 12(f) and Rule 15(a)(1)-(2) of the Federal

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Rules of Civil Procedure. (Doc. 35) Because the Court concludes Plaintiff’s leave to amend was not

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limited, the motion to strike is DENIED.

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I.

Relevant Background

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In the First Amended Complaint filed on August 14, 2017, Plaintiff identified the following

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causes of action: (1) failure to respond to Qualified Written Requests in violation of the Real Estate

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Settlement Procedures Act, 12 U.S.C. § 2605; (2) violations of the Fair Debt Collection Practices Act,
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15 U.S.C. § 1692; (3) violations of the Consumer Financial Protection Bureaus Loss Mitigation Laws,

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Regulations, and Procedures, 12 C.F.R. §1024.41; (4) violations of the Fair Credit Reporting Act, 15

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U.S.C. § 1685; and (5) violation of the confidentiality of financial records and privacy under 12 U.S.C.

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§ 3403 and 12 C.F.R. 1016. (See Doc. 21 at 6-29)
Defendant challenged several causes of action through a motion to dismiss, which was granted

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by the Court on October 12, 2017. (Docs. 24, 30) The Court dismissed the first, second, third, and

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fourth claims for relief with leave to amend; and the fifth claim was dismissed without leave to amend.

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(Doc. 30 at 15) Plaintiff was ordered to “file a Second Amended Complaint within thirty days of the

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date of service of th[e] order” that “exclude[d] all unnecessary evidentiary detail, including allegations

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related to claims barred by the statute of limitations.” (Id.) The Court informed Plaintiff that if he

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failed to comply with the order, the Court would deem it an admission that he could not “cure the

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complaint.” (Id. at 16)
On November 14, 2017, Plaintiff filed his Second Amended Complaint. (Doc. 33) In the

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amended pleading, Plaintiff alleged the following causes of action: (1) violations of the Consumer

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Financial Protection Bureaus Loss Mitigation Laws, Regulations, and Procedures, 12 C.F.R. §1024.41,

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and California Foreclosure Reduction Act of 2013, Cal. Civ. Code § 2923.7; (2) violation of The

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Privacy Act, 12U.S.C. § 3403; (3) breach of a fiduciary duty; (4) breach of the covenant of good faith

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and fair dealing; and (5) fraud. (See Doc. 33 at 1, 11-19) Defendant now seeks to strike the first cause

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of action to the extent it is based upon California law, as well as the third, fourth, and fifth causes of

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action in their entirety. (Doc. 35)

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II.

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Striking Portions of a Complaint
Pursuant to Rule 12(f), a district court “may strike from a pleading . . . any redundant,

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immaterial, impertinent, or scandalous matter.” Fed. R. Civ. P. 12(f). A “redundant” matter is

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comprised “of allegations that constitute a needless repetition of other averments or which are foreign

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to the issue to be denied.” Wilkerson v. Butler, 229 F.R.D. 166, 170 (E.D. Cal. 2005). An immaterial

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matter “has no essential or important relationship to the claim for relief or the defenses being pleaded,”

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while an “[i]mpertinent matter consists of statements that do not pertain, and are not necessary, to the

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issues in question.” Fantasy, Inc. v. Fogerty, 984 F.2d 1524, 1527 (9th Cir. 1993), rev’d on other
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grounds (quoting 5 Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 1382, at

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706-07, 711 (1990)). The purpose of a Rule 12(f) motion “is to avoid the expenditure of time and

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money that must arise from litigating spurious issues by dispensing with those issues prior to trial.”

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Sidney-Vinstein v. A.H. Robins Co., 697 F.2d 880, 885 (9th Cir. 1983).

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In addition, pursuant to Local Rule 110, “[f]ailure of … a party to comply with …any order of

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the Court may be grounds for imposition by the Court of any and all sanctions authorized by statute or

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Rule or within the inherent power of the Court.” As the Ninth Circuit observed, “district courts have

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inherent power to control their dockets and may impose sanctions, including dismissal, in the exercise

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of that discretion.” Hernandez v. City of El Monte, 138 F.3d 393, 398 (9th Cir. 1998) (citation

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omitted). For example, “based on its inherent powers, a court may strike material from the docket,

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including portions of a document, reflecting procedural impropriety or lack of compliance with court

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rules or orders.” Jones v. Metro. Life Ins. Co., 2010 WL 4055928, at *6 (N.D. Cal. Oct. 15, 2010)

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(collecting cases); see also Vahora v. Valley Diagnostics Lab., Inc., 2017 WL 2572440 (E.D. Cal. June

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14, 2017) (explaining the Court has the authority under Rule 12(f) and as part of its inherent power to

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strike causes of action from a complaint).

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III.

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Discussion and Analysis
Defendants argue several causes of action in the Second Amended Complaint should be stricken

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because Plaintiff “did not seek and was not granted leave to bring these claims, either by independent

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motion or in opposing defendants’ prior motion to dismiss.” (Doc. 35 at 4) Specifically, Defendants

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contend Plaintiff’s first cause of action, to the extent it is based upon a violation of Cal. Civ. Code §

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2923.7, should be stricken. (Id.) In addition, Defendants argue the causes of actions for breach of

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fiduciary duty, breach of the covenant of good faith and fair dealing, and fraud should be stricken. (Id.)

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As Defendants acknowledge, district courts within the Ninth Circuit “generally allow plaintiffs

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to add new claims and/or parties to an amended complaint where a prior order of dismissal granted

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leave to amend without limitation.” Vahora, 2017 WL 2572440 at *2 (quoting Jameson Beach Prop.

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Owners Assoc. v. United States, 2014 WL 4925253 at *3 (E.D. Cal. Sept. 29, 2014)); see also Cover v.

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Windsor Surry Co., 2016 WL 3421361 at *3 (N.D. Cal. June 22, 2016); Topadzhikyan v. Glendale

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Police Dep’t, 2010 WL 2740163 at *3 n.1 (C.D. Cal. July 8, 2010). On the other hand, “where leave
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to amend is given to cure deficiencies in certain specified claims, courts have held that new claims

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alleged for the first time in the amended pleading should be dismissed or stricken.” Vahora, 2017 WL

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2572440 at *2 (quoting Ketab Corp. v. Mesriani & Assocs., 2015 WL 8022874 at *8 (C.D. Cal. Dec.

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4, 2015); see also Jameson Beach Prop. Owners Assoc., 2014 WL 4925253 at *3 (“where a prior court

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order granted limited leave to amend, District Courts in this circuit generally strike new claims or

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parties contained in an amended complaint when the plaintiff did not seek leave to amend”).

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Consequently, whether the court will accept new causes of action “after a motion to dismiss will

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depend on whether the plaintiff was granted leave to amend with or without limitation.” Jameson

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Beach Prop. Owners Assoc, 2014 2014 WL 4925253 at *3.

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To determine “whether or not leave to amend was granted without limitation,” the Court must

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evaluate “the specific language of the prior order.” Jameson Beach Prop. Owners Assoc, 2014 2014

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WL 4925253 at *3. “When the language of an order clearly states that a plaintiff may only amend to

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address certain deficiencies identified in the order, courts have held that a plaintiff is barred from

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adding new claims or parties.” Id. at *4. For example, in Kouretas v. Nationstar Mortg. Holdings,

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Inc., the Court found the plaintiff’s new claims should be dismissed as exceeding the scope of the its

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order where the order granted a motion to dismiss and provided “leave to amend as to” a specific

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claim, but other claims where dismissed “without leave to amend.” Id. 2015 WL 1751750, at *2 (E.D.

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Cal. Apr. 16, 2015). Likewise, the court found leave to dismiss was limited where the order stated the

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plaintiff could “file an amended complaint addressing the deficiencies identified herein.” Benton v.

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Baker Hughes, 2013 WL 3353636 at *3 (C.D. Cal. June 30, 2013).

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In this case, the Court addressed each claim challenged by the defendants in the motion to

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dismiss. (See Doc. 30 at 8-15) The Court agreed Plaintiff’s fifth claim for relief failed as a matter of

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law, to the extent it was based upon 12 C.F.R. § 1016. (Id. at 15) To that extent, the fifth claim was

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dismissed without leave to amend. (Id.) As to the remaining claims challenged by the defendants, the

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Court found the facts alleged were insufficient and dismissed claims with leave to amend. (Id. at 8-14)

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In doing so, the Court indicated it was granting Plaintiff and opportunity to “cure the complaint.” (Id.

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at 15) The Court is not persuaded this language limited Plaintiff to curing only the challenged causes

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of action.
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Even if the Court were to agree that Plaintiff exceeded the scope of leave granted, “[e]xceeding

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the scope of a court’s leave to amend is not necessarily sufficient grounds for striking a pleading or

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portions thereof.” Khan v. K2 Pure Sols., L.P., 2013 WL 6503345, at *11 (N.D. Cal. Dec. 4, 2013).

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Rather, “the court may choose not to strike the pleading in the interests of judicial economy,’ even

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‘when a pleading is improperly filed.’” Vehora, 2017 WL 2572440 at *4 (quoting Manzano v. MetLife

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Bank N.A., 2011 WL 2080249 at *3 (E.D. Cal. May 25, 2011)). This is particularly true “when it does

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not appear that any of the parties will be prejudiced by allowing the change.” Id. (citation omitted).

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Thus, the Court has declined to strike portions of a complaint where the case was “in its infancy and

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the Court has not yet entered a scheduling order.” Id. Similarly, here, the case has not been scheduled

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and there is not any prejudice, as the defendants have concurrently filed a motion to dismiss the same

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causes of action they seek to strike. (See Doc. 34)

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IV.

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Conclusion and Order
Defendants fail to demonstrate the new claims exceed the scope of the Court’s order granting

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Plaintiff leave to amend the pleading. Accordingly, the Court finds Plaintiff has complied with the

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Courts order to file a Second Amended Complaint, and the new causes of action should not be stricken

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pursuant to Rule 12(f). See Vehora, 2017 WL 2572440 at *3-4.

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Based upon the foregoing, the Court ORDERS: Defendants’ motion to strike portions of the
Second Amended Complaint (Doc. 35) is DENIED.

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IT IS SO ORDERED.
Dated:

January 11, 2018

/s/ Jennifer L. Thurston
UNITED STATES MAGISTRATE JUDGE

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