Hopkins v. Wells Fargo Bank, N.A.

Filing 29

MEMORANDUM and ORDER signed by Senior Judge William B. Shubb on 2/24/14 ORDERING that Defendant's MOTION for Judgment on the Pleadings 22 is GRANTED; The Clerk is instructed to enter judgment in accordance with this Order and close the file. CASE CLOSED. (Mena-Sanchez, L)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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TERRY L. HOPKINS,
Plaintiff,

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CIV. NO. 2:13-444 WBS CKD
MEMORANDUM AND ORDER RE: MOTION
FOR JUDGMENT ON THE PLEADINGS

v.
WELLS FARGO BANK, N.A., and
DOES 1-10,
Defendant.

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Plaintiff Terry L. Hopkins brought this action against

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defendant Wells Fargo Bank, N.A, arising out of defendant’s

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failure to disburse insurance proceeds that plaintiff alleges she

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is entitled to.

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filed for and received a discharge in bankruptcy.

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moves for judgment on the pleadings pursuant to Federal Rule of

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Civil Procedure 12(c) on the basis that plaintiff’s failure to

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list her remaining claims1 as assets in her bankruptcy petition

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Before she initiated this action, plaintiff
Defendant now

In a previous Order, the court dismissed all but two of
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estops her from asserting those claims here.

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(Docket No. 22.)

“After the pleadings are closed -- but early enough not

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to delay trial -- a party may move for judgment on the

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pleadings.”

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the pleadings, the court takes all factual allegations of the

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non-moving party as true and construes them in the light most

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favorable to that party.

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(9th Cir. 2009) (citing Turner v. Cook, 362 F.3d 1219, 1225 (9th

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Cir. 2004)).

Fed. R. Civ. P. 12(c).

On a motion for judgment on

Fleming v. Pickard, 581 F.3d 922, 925

However, the court need not accept as true

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“allegations that contradict matters properly subject to judicial

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notice.”

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(9th Cir. 2001).

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when there is no issue of material fact in dispute, and the

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moving party is entitled to judgment as a matter of law.”

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Fleming, 581 F.3d at 925.

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Sprewell v. Golden State Warriors, 266 F.3d 979, 988
“Judgment on the pleadings is properly granted

Judicial estoppel is an equitable doctrine “that

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precludes a party from gaining an advantage by asserting one

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position, and then later seeking an advantage by taking a clearly

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plaintiff’s claims: a claim for breach of contract, and a claim
for breach of the implied covenant of good faith and fair
dealing. (Docket No. 16.) That Order describes the factual and
procedural history of this case, and the court need not repeat it
here.
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“When considering a motion for judgment on the
pleadings, this court may consider facts that ‘are contained in
materials of which the court may take judicial notice.’”
Heliotrope Gen., Inc. v. Ford Motor Co., 189 F.3d 971, 981 n.13
(9th Cir. 1999) (quoting Barron v. Reich, 13 F.3d 1370, 1377 (9th
Cir. 1994)). The court will take judicial notice of plaintiff’s
bankruptcy filings, (Def.’s Req. for Judicial Notice (“RJN”) Exs.
6-10 (Docket No. 23)), as these are matters of public record
whose accuracy cannot be questioned. See Fed. R. Evid. 201;
Rosal v. First Fed. Bank of Cal., 671 F. Supp. 2d 1111, 1121
(N.D. Cal. 2009) (taking judicial notice of bankruptcy filings).
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inconsistent position.”

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Co., 270 F.3d 778, 782 (9th Cir. 2001).

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outlined three factors that “typically inform” the application of

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this doctrine: (1) whether a party’s later position is “clearly

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inconsistent” with its earlier position; (2) whether a party has

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“succeeded in persuading a court to adopt that party’s earlier

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position”; and (3) whether a party “would derive an unfair

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advantage” if not estopped.

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742, 750-51 (2001).

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Hamilton v. State Farm Fire & Cas. Ins.
The Supreme Court has

New Hampshire v. Maine, 532 U.S.

Applying these factors, the Ninth Circuit has held that

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judicial estoppel ordinarily bars a plaintiff from asserting a

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claim that she knew of and failed to list as an asset in her

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bankruptcy petition.

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733 F.3d 267, 271 (9th Cir. 2013) (citations omitted); Hamilton,

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270 F.3d at 785.

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on April 7, 2010.

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included a space for plaintiff to list “contingent and

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unliquidated claims of every nature.”

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not disclose any claims against defendant in those schedules.

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(See id.)

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2010, she did not avail herself of the opportunity to correct

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this omission by disclosing her claims against defendant.

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Def.’s RJN Ex. 8.)

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2, 2010 did plaintiff file this action.

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Ah Quin v. Cnty. of Kauai Dept. of Transp.,

Here, plaintiff filed her bankruptcy schedules
(See Def.’s RJN Ex. 7.)

Those schedules

(See id.)

Plaintiff did

And while plaintiff amended those schedules on June 9,

(See

Only after receiving a discharge on December

Plaintiff does not dispute that she failed to disclose

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any claims against defendant.

Instead, she argues that she “was

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under no duty” to disclose her remaining claims because they had

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not yet accrued.

(Pl.’s Opp’n at 4:13-14 (Docket No. 26).)
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Plaintiff’s remaining claims collectively allege that defendant’s

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failure to disburse insurance proceeds to her on October 15,

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2009, constituted a breach of contract and a breach of the

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covenant of good faith and fair dealing.

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California law provides that both of these claims accrue at the

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time of the breach –- which, in this case, occurred before

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plaintiff filed her bankruptcy petition.3

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Ins. Co. of Am., 68 Cal. 2d 822, 831 (1968) (“Generally, a cause

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of action for breach of contract accrues at the time of the

(See Compl. ¶ 14.)

See Reichert v. Gen.

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breach.” (citations omitted)); Frazier v. Metropolitan Life. Ins.

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Co., 169 Cal. App. 3d 90, 103 (2d Dist. 1985) (holding that a

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claim for breach of the implied covenant of good faith and fair

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dealing accrued when plaintiff’s insurer wrongfully denied her

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claim).

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Plaintiff relies on California’s “discovery rule”,

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which “postpones accrual of a cause of action until the plaintiff

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discovers, or has reason to discover, the cause of action,” in

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order to argue that her claims had not yet accrued because she

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was not yet aware of them.

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383, 397 (1999).

Norgart v. Upjohn Co., 21 Cal. 4th

But both federal and state courts have

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In a letter sent on December 3, 2010, a day after
plaintiff received a discharge in bankruptcy, defendant informed
plaintiff that it would apply the un-spent insurance proceeds
towards the unpaid principal balance of her mortgage loan after
it foreclosed on her property. (Decl. of Terry L. Hopkins, Ex. A
(Docket No. 26).) Despite plaintiff’s insistence to the
contrary, this letter does not establish that her claims accrued
only after she filed for bankruptcy. As the Complaint makes
clear, those claims accrued on October 15, 2009, the date on
which defendant allegedly refused to disburse those proceeds to
plaintiff and on which plaintiff was aware of defendant’s
allegedly wrongful conduct. (See Compl. ¶ 14.)
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clarified that this principle does not apply merely because a

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plaintiff was unaware of the legal theory supporting her claim;

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rather, she must have been unaware of its factual basis.

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Carr v. Beverly Health Care & Rehab. Servs., Inc., Civ. No. 12-

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2980 EMC, 2013 WL 5946364, at *5 (N.D. Cal. Nov. 5, 2013) (“Under

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Ninth Circuit case law, what is crucial is whether the debtor-

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plaintiff has knowledge of the underlying facts constituting the

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wrongdoing, not whether the wrongdoing necessarily gives rise to

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a legal cause of action.” (citing Hamilton, 230 F.3d at 784)).

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Here, plaintiff’s allegations establish that she was

Id.;

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aware of defendant’s breach on October 15, 2009, when defendant

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refused to disburse insurance proceeds to her so that she could

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obtain a new modular home after her home was destroyed by a fire.

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(See Compl. ¶ 14.)

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conduct constituted a breach of contract or a breach of the

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covenant of good faith and fair dealing, her awareness that

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defendant had withheld the insurance proceeds renders the

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discovery rule inapplicable.

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Carr, 2013 WL 5946364, at *5.

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Even if plaintiff was unaware that this

See Norgart, 21 Cal. 4th at 397;

Nor is defendant barred from asserting estoppel because

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it “took no steps at all to turn over to Plaintiff’s trustee or

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pay into the bankruptcy court” the proceeds it allegedly failed

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to disburse.

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characterization of these proceeds as “[p]laintiff’s money,” (id.

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at 12:8-9), militates in favor of estoppel: if this money did

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belong to plaintiff -- or, more accurately, to the bankruptcy

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estate, see 11 U.S.C. § 541 -- then it was an asset that

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plaintiff had a duty to disclose.

(Pl.’s Opp’n at 12:7-8.)

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In fact, plaintiff’s

See Rose v. Beverly Health and

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Rehab. Servs., 356 B.R. 18, 26 (E.D. Cal. 2006) (Ishii, J.)

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(emphasizing that a plaintiff has a duty to disclose “all

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potential assets that could be marshaled to satisfy the

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bankruptcy estate’s obligations”, including “contingent and

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unliquidated claims”).

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While plaintiff relies on 11 U.S.C. § 542 in support of

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the proposition that defendant had an “affirmative duty” to turn

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over these insurance proceeds to the trustee of the bankruptcy

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estate, (see Pl.’s Opp’n at 12:22), that statute explicitly

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provides that “an entity that has neither actual notice nor

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actual knowledge of the commencement of the case concerning the

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debtor” has no such duty.

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highlighted, and the court cannot identify, any evidence that

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defendant had such knowledge during the course of the bankruptcy

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proceedings or at any other point before plaintiff filed this

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lawsuit.

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11 U.S.C. § 542(c).

Plaintiff has not

Whether or not defendant suffered any damage as a

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result of this failure to disclose is immaterial because “the

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doctrine of judicial estoppel is concerned with the integrity of

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the courts, not the effect on parties.”

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(emphasis in original).

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claims, obtains a discharge of her debt, and then attempts to

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retain the proceeds of her debt not only threatens the interests

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of her creditors, but undermines “the integrity of the bankruptcy

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process” itself.

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fact entitled to recover the insurance proceeds that defendant

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allegedly withheld, those proceeds presumably would have been

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applied to satisfy her debts, which exceeded her stated assets by

Ah Quin, 733 F.3d at 275

A debtor who fails to disclose her

Hamilton, 270 F.3d at 785.

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If plaintiff was in

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over $600,000.

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been discharged, plaintiff has received an “unfair advantage in

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bankruptcy court by failing to list the claim.”

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McHugh, --- F.3d ----, No. 11-16404, 2014 WL 128605, at *2 (9th

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Cir. 2014).

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(See RJN Ex. 7.)

Because those debts have since

Dzakula v.

Finally, plaintiff asserts that her failure to disclose

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her claims was “inadvertent.” (Pl.’s Opp’n at 14:12-13.)

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Ninth Circuit has recognized that when a plaintiff corrects her

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bankruptcy petition to disclose a claim after initially failing

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to do so, the court must inquire into whether that omission was

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“inadvertent or mistaken.”

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as is the case here -- a plaintiff has not subsequently disclosed

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her un-listed claims to the bankruptcy court, “a presumption of

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deliberate manipulation” applies and the plaintiff may not rely

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upon her purported inadvertence to escape estoppel.

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Plaintiff concedes that she “fail[ed] to make such a disclosure,”

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(Pl.’s Opp’n at 14:12-13), and she is therefore estopped from

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asserting her remaining claims even if her initial omission was

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inadvertent.4

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Ah Quin, 733 F.3d at 276.

The

But if --

Id. at 273.

Because plaintiff knew of the factual basis of her

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remaining claims, failed to disclose them, received a discharge

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on the basis of her representations to the bankruptcy court, and

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has made no attempt to correct that omission, she is estopped

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from asserting those claims now.

See Ah Quin, 733 F.3d at 271.

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The court likewise concludes that plaintiff’s proposal
to amend the complaint to allege that her failure to disclose
these claims was inadvertent or mistaken would be futile, and
therefore will not grant leave to amend. See DeSoto v. Yellow
Freight Sys., Inc., 957 F.2d 655, 658 (9th Cir. 1992).
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Accordingly, the court will grant defendant’s motion for judgment

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on the pleadings.

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IT IS THEREFORE ORDERED that defendant’s motion for
judgment on the pleadings be, and the same hereby is, GRANTED.

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The Clerk of the Court is instructed to enter judgment

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in accordance with this Order and close the file.

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Dated:

February 24, 2014

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