Pedersen et al v. Greenpoint Mortgage Funding, Inc. et al
Filing
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ORDER signed by Judge Kimberly J. Mueller on 10/11/13 ORDERING that Aurora's MOTION to Dismiss 87 is GRANTED, and Plantiff Tinker's Fourth Amended Complaint, omitting Pedersen as a Plaintiff and eliminating the fourth fraudulent representation, is due within twenty-one days of the date of this order. (Mena-Sanchez, L)
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UNITED STATES DISTRICT COURT
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FOR THE EASTERN DISTRICT OF CALIFORNIA
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CHRISTIAN PEDERSEN, et al.,
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Plaintiffs,
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Civ. No. S-11-642 KJM EFB
v.
ORDER
AURORA LOAN SERVICES,
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Defendant.
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Defendant Aurora Loan Services’ (“Aurora”) motion to dismiss Christian Pedersen
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(“Pedersen”) as a plaintiff and to dismiss one claim of the Third Amended Complaint (“TAC”) is
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pending before the court. Plaintiff Tinker filed an untimely opposition. ECF No. 91 at 2.1
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Aurora has filed a reply. The court ordered the motion submitted without argument and now
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GRANTS the motion to dismiss.
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I. BACKGROUND
On March 8, 2011, plaintiffs filed an action against Aurora Loan Services, LLC
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and Mortgage Electronic Registration Systems, as well as Greenpoint Mortgage Funding, Inc.
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The TAC contains a number of errors that the court simply notes: It refers throughout to
“plaintiffs.” Moreover, it includes a number of allegations relating only to claims that have
previously been dismissed. Finally, in connection with the fourth claimed false representation,
which stems from a letter Aurora sent in January 2011, the complaint alleges that plaintiff did not
realize the actions were fraudulent until she contacted an attorney in September 2010. ECF No.
86 ¶ 56.
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(Greenpoint), Marin Conveyancing Corp., Quality Loan Service Corp., LSI Title Company,
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Greenpoint Mortgage Funding Trust Mortgage Pass-Through Certificates, Series 2007-ARI, and
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twenty Doe defendants, alleging violations of the Homeowners Equity Protection Act (HOEPA),
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15 U.S.C. § 1639, et seq.; the Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. § 2601,
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et seq.; the Truth in Lending Act (TILA), 15 U.S.C. § 1601, et seq. and Regulation Z § 226.4;
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fraudulent misrepresentation; breach of fiduciary duty; unjust enrichment; civil conspiracy;
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RICO; quiet title; usury and fraud; wrongful foreclosure; and breach of trust instruments.
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On April 7, 2011, plaintiffs filed a motion for a temporary restraining order,
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alleging that a trustee’s sale of their house was scheduled for April 11, 2011, but that defendants
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did not have the legal authority to foreclose on plaintiffs’ property. (ECF 9.) Although plaintiffs
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gave defendants notice of their application for a restraining order, defendants did not respond.
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(ECF 14.) The court denied the application on April 8, 2011. (ECF 15.)
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Defendants Aurora and MERS filed a motion to dismiss and to expunge a lis
pendens on April 15, 2011, in tandem with a request for judicial notice. (ECFs 16, 17.)
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On April 20, 2011, plaintiffs filed a motion for a preliminary injunction and on the
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same day, defendants Quality Loan Service Corporation and LSI Title Company filed
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Declarations of Non-Monetary Status under California Civil Code § 2924l. (ECF 18.) On May
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18, 2011, plaintiffs filed objections to these declarations. (ECF 34.)
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On August 29, 2011, the court granted defendants’ motion to dismiss, giving
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plaintiffs leave to file an amended complaint as to some of the claims. It also overruled Quality
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and LSI Title’s declaration of non-monetary status and denied the motion to expunge the lis
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pendens. It also denied plaintiffs’ motion for a preliminary injunction. (ECF 56.)
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Plaintiffs filed their first amended complaint on September 16, 2011; it raised
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seven claims: (1) TILA violations; (2) RESPA violations; (3) fraud; (4) unjust enrichment;
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(5) civil RICO violations; (6) wrongful foreclosure; and (7) quiet title. (ECF 57.)
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On September 30, 2012, the court granted defendant’s motion to dismiss, giving
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plaintiff leave to file an amended complaint as to the fraud claim against defendant Aurora only.
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(ECF 75.)
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Plaintiffs filed their second amended complaint (SAC) on October 22, 2012. (ECF
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76.) The complaint was limited to a single cause of action for fraud, but alleged six individual
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communications, each of which individually alleges fraud. (Id. ¶¶ 42-66.)
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Defendants moved to dismiss the SAC on December 5, 2012, on a number of
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grounds. The court found plaintiffs’ first three communications relating to the workout
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agreements to be sufficiently pleaded as fraud, but dismissed the remaining three. It also found
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that plaintiffs had not sufficiently pleaded that plaintiff Pedersen had standing to pursue the
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action.
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Plaintiff filed her TAC on August 13, 2013, alleging a cause of action for fraud,
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repeating the three false representations the court had previously found sufficient and purportedly
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adding a fourth claim2 based on Aurora’s alleged non-compliance with the Home Affordable
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Modification Program (HAMP). ECF No. 8.
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II. ANALYSIS
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A. Standard for a Motion to Dismiss
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Under Rule 12(b)(6) of the Federal Rules of Civil Procedure, a party may move to
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dismiss a complaint for "failure to state a claim upon which relief can be granted." A court may
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dismiss “based on the lack of cognizable legal theory or the absence of sufficient facts alleged
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under a cognizable legal theory.” Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir.
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1990). A motion to dismiss under this rule may also challenge the sufficiency of fraud allegations
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under the more particularized standard of Rule 9(b) of the Federal Rules of Civil Procedure. Vess
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v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1107 (9th Cir. 2003).
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Although a complaint need contain only “a short and plain statement of the claim
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showing that the pleader is entitled to relief,” (Fed. R. Civ. P. 8(a)(2)), in order to survive a
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motion to dismiss this short and plain statement “must contain sufficient factual matter . . . to
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‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
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(quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A complaint must include
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There are two headings “False Representation 3.” ECF 86 at 9-10.
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something more than “an unadorned, the-defendant-unlawfully-harmed-me accusation” or
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“‘labels and conclusions’” or “‘a formulaic recitation of the elements of a cause of action.’” Id.
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(quoting Twombly, 550 U.S. at 555). Determining whether a complaint will survive a motion to
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dismiss for failure to state a claim is a “context-specific task that requires the reviewing court to
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draw on its judicial experience and common sense.” Id. at 679. Ultimately, the inquiry focuses on
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the interplay between the factual allegations of the complaint and the dispositive issues of law in
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the action. See Hishon v. King & Spalding, 467 U.S. 69, 73 (1984).
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In making this context-specific evaluation, this court must construe the complaint
in the light most favorable to the plaintiff and accept as true the factual allegations of the
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complaint. Erickson v. Pardus, 551 U.S. 89, 93-94 (2007). This rule does not apply to “‘a legal
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conclusion couched as a factual allegation,’” Papasan v. Allain, 478 U.S. 265, 286 (1986) (quoted
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in Twombly, 550 U.S. at 555), nor to “allegations that contradict matters properly subject to
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judicial notice” or which contradicts material attached to or incorporated by reference into the
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complaint. Sprewell v. Golden State Warriors, 266 F.3d 979, 988-89 (9th Cir. 2001). A court’s
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consideration of documents attached to a complaint or incorporated by reference or a matter
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subject to judicial notice will not convert a motion to dismiss into a motion for summary
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judgment. United States v. Ritchie, 342 F.3d 903, 907 (9th Cir. 2003); Parks Sch. of Bus. v.
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Symington, 51 F.3d 1480, 1484 (9th Cir. 1995); c.f. Van Buskirk v. CNN, 284 F.3d 977, 980 (9th
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Cir. 2002) (noting that even though court may look beyond pleadings on motion to dismiss,
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generally court is limited to face of the complaint on 12(b)(6) motion).
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Aurora has asked the court to take judicial notice of a number of documents
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relating to the purchase, foreclosure, and trustee’s sale of the property at issue. As these are not
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relevant to the fraud claim Aurora is challenging, the court declines to take notice of these
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documents.
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B. Analysis
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i. Fraud
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Under Rule 9(b) of the Federal Rules of Civil Procedure, a plaintiff who alleges
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fraud “must state with particularity the circumstances constituting the fraud,” but may describe
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generally the state of mind animating the fraud. The pleading must “‘be specific enough to give
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defendants notice of the particular misconduct . . . so that they can defend against the charge and
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not just deny that they have done anything wrong.’” Sanford v. Memberworks, Inc., 625 F.3d 550,
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558 (9th Cir. 2010) (quoting Kearns v. Ford Motor Co., 567 F.3d. 1120, 1124 (9th Cir. 2009)).
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To avoid dismissal, the complaint must describe the time, place, and specific content of the false
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representations and identify the parties to the misrepresentations. Id.; Dooms v. Federal Home
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Loan Mortg. Corp., No. CV F 11-0352 LJO DLB, 2011 WL 1232989, at *14 (E.D. Cal. Mar. 31,
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2011). In instances of corporate fraud, plaintiffs must plead the misrepresentations with
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particularity but may plead the roles of individual defendants based on information and belief.
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Moore v. Kayport Package Exp., Inc., 885 F.2d 531, 540 (9th Cir. 1989).
Plaintiff Tinker alleges that an Aurora staff person told her that she qualified for a
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modification under the HAMP program, so she should stop the loan modification with Aurora and
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instead pursue the HAMP process. ECF No. 86 ¶ 43. Thereafter, in January 2011, a
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representative of Aurora told her Aurora declined to modify her loan under HAMP because she
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made too much money to qualify for HAMP. Id. Relying on the statement about income,
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plaintiff divested herself of some of her rental income and reapplied for a HAMP modification.
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Id. ¶ 45. Aurora told her she could not apply for a HAMP modification more than once. Id. ¶
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46. Aurora falsely represented, however, that it had followed the HAMP guidelines in evaluating
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her request for a loan modification. Id. ¶ 47 & Ex. G (letter from Aurora dated January 6, 2011).
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Moreover, as plaintiff had successfully completed three trial payment periods, Aurora was
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obligated to offer her a loan modification yet falsely claimed she did not qualify. Id. Plaintiff
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characterizes the actions of Aurora as fraud and does not plead any other cause of action
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stemming from this series of events.
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Aurora argues that the letter attached as Exhibit G does not support plaintiff’s
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claim about the false representation and that plaintiff has not otherwise addressed the deficiencies
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the court identified in dismissing this claim in its prior order. ECF 87 at 12. Moreover, as the
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court noted, plaintiff attached various documentary evidence to her opposition to the previous
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motion to dismiss, but has not incorporated this information in the TAC. Aurora is correct:
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plaintiff has not addressed the deficiencies the court identified in its prior order but rather has
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made only a few cosmetic changes to the claim. As plaintiff’s counsel has not been able to plead
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this claim adequately, despite the court’s prior discussion of the requirements for such a claim;
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the court dismisses this fourth claimed fraudulent representation without leave to amend it as a
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fraud claim.
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ii. Pedersen
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Plaintiff Tinker has not addressed whether Pedersen has any standing to challenge
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Tinker’s dealings with Aurora concerning loan modification. She apparently accepts that
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Pedersen is no longer a plaintiff.
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IT IS THEREFORE ORDERED that:
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1. Aurora’s motion to dismiss, ECF 87, is granted, and
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2. Plaintiff Tinker’s Fourth Amended Complaint, omitting Pedersen as a plaintiff
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and eliminating the fourth fraudulent representation, is due within twenty-one days of the date of
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this order.
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DATED: October 11, 2013.
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UNITED STATES DISTRICT JUDGE
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