Brambila et al v. Wells Fargo Bank

Filing 23

AMENDED ORDER GRANTING Wells Fargo's Motion to Dismiss Complaint 7 . Signed by Judge Nathanael Cousins on 11/1/12. (Attachments: # 1 Certificate/Proof of Service)(lmh, COURT STAFF) (Filed on 11/1/2012)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SAN FRANCISCO DIVISION

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PEDRO BRAMBILA; DOMINGA
BRAMBILA,

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Plaintiffs,

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AMENDED ORDER GRANTING
WELLS FARGO’S MOTION TO
DISMISS COMPLAINT

v.

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Case No. 12-cv-04224 NC

Re: Dkt. Nos. 7, 8, 10, 11
WELLS FARGO BANK, AS TRUSTEE FOR
THE MLMI SERIES 2005-FF6 and DOES 1
through 50, inclusive,
Defendants.

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Defendant Wells Fargo Bank moves to strike Pedro and Dominga Brambila’s

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complaint, arguing that (1) the majority of claims asserted in the complaint parallel those

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already dismissed with prejudice in a prior action in California state court and are barred

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by res judicata, and (2) the only additional claim is barred by California’s final judgment

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rule. Wells Fargo’s motion to strike is unopposed by the Brambilas. The Court finds the

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motion is appropriate for determination without oral argument. See Civil L.R. 7-1(b).
Because the Brambilas’ claims 1, 2, and 4-10 are barred by res judicata, and

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because the Court declines to exercise supplemental jurisdiction over claim 3, Wells

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Fargo’s motion to strike is GRANTED.

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//

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Case No. 12-cv-04224 NC
AMENDED ORDER GRANTING
MOTION TO DISMISS

I. BACKGROUND

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A. The State Court Action
Plaintiffs Pedro and Dominga Brambila are pro se plaintiffs that reside at 2080

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Roper Circle, Brentwood, California 94513 (Subject Property). Compl. ¶ 1, Dkt. No. 1.

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Defendant Wells Fargo Bank, N.A., is the trustee of the MLMI Trust Series 2005-FF6,

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which holds the mortgage to the Subject Property. Id. ¶ 2.

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On January 12, 2010, the Brambilas filed a complaint against Wells Fargo in

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Contra Costa County Superior Court (“Brambila I”). Def.’s Req. Jud. Not. (“RJN”), Exh.

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1 (state court complaint), Dkt. No. 11. There, the Brambilas asserted nine causes of

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action against Wells Fargo for: (1) fraudulent misrepresentation; (2) fraudulent

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inducement; (3) violation of the Fair Debt Collection Practices Act; (4) predatory lending

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practices; (5) breach of contract, trust, and fiduciary duty; (6) RICO violations; (7) quiet

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title; (8) declaratory relief; and (9) injunctive relief. See id. On March 23, 2010, Wells

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Fargo filed a demurrer to the Brambila I complaint. Def.’s RJN, Exh. 2. Wells Fargo’s

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demurrer was sustained with leave to amend on June 30, 2010. Def.’s RJN, Exh. 3.

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On July 28, 2010, Wells Fargo moved ex parte for dismissal due to the Brambilas’

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failure to file an amended complaint within the time allowed by the state court. Def.’s

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RJN, Exh. 4. The state court granted Wells Fargo’s ex parte application and dismissed

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the Brambila I complaint with prejudice. Def.’s RJN, Exh. 5. On September 23, 2010,

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the state court entered final judgment of dismissal in favor of Wells Fargo in Brambila I.

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Def.’s RJN, Exh. 6.

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B. Federal Proceedings

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On August 10, 2012, the Brambilas filed the present complaint in federal court.

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Compl., Dkt. No. 1. The Brambilas’ complaint asserts ten causes of action for: (1)

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fraudulent misrepresentation; (2) fraudulent inducement; (3) filing false recorded

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documents; (4) violation of the Fair Debt Collection Practices Act; (5) predatory lending

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practices; (6) breach of trust, contract, and fiduciary duty; (7) RICO violations; (8) quiet

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title; (9) declaratory relief; and (10) injunctive relief. See Compl. With the exception of
Case No. 12-cv-04224 NC
AMENDED ORDER GRANTING
MOTION TO DISMISS

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the Brambilas’ claim for filing false recorded documents, these claims mirror those

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asserted in the Brambila I complaint. See Compl.; see also Def.’s RJN, Exh. 1 (state

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court complaint).

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1. Wells Fargo’s Motion to Strike

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Wells Fargo now moves to strike the complaint filed in the present action. Def.’s

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Mot. Strike, Dkt. No. 10. Wells Fargo argues that claims 1, 2, and 4-10 are barred from

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re-litigation by the doctrine of res judicata because the state court issued a final judgment

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on these claims in Brambila I. Id. at 3. Wells Fargo argues that claim 3 also should be

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dismissed because it arises out of the same injury giving rise to the claims asserted in the

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Brambila I complaint, and thus is barred by California’s final judgment rule. Id. Wells

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Fargo’s motion to strike is unopposed.1

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2. Wells Fargo’s Motion to Dismiss

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Wells Fargo filed a separate motion to dismiss the complaint in the present action.

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Def.’s Mot. Dismiss, Dkt. No. 7. Wells Fargo argues that all the claims should be

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dismissed for failure to state a single claim upon which relief can be granted. Id. at 1.

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Wells Fargo’s motion to dismiss is also unopposed.

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C. Jurisdiction

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This Court has subject matter jurisdiction over the Brambilas’ federal claims under

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15 U.S.C. § 1692k(d) and 18 U.S.C. § 1965(a), and supplemental jurisdiction over the

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state law claims under 28 U.S.C. § 1367. All parties have consented to the jurisdiction of

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a magistrate judge under 28 U.S.C. § 636(c). Dkt. Nos. 4, 15.

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II. STANDARD OF REVIEW

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A. Motion to Dismiss
To survive a motion to dismiss under Rule 12(b)(6), a plaintiff must plead her
claim with sufficient specificity to “give the defendant fair notice of what the claim is and

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On October 5, 2012, the Brambilas filed a request for entry of default judgment. Req.
Default, Dkt. No. 16. The clerk of the court declined the Brambilas’ request, as Wells Fargo’s
motion to dismiss constitutes a response to the complaint.
Case No. 12-cv-04224 NC
AMENDED ORDER GRANTING
MOTION TO DISMISS

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the grounds upon which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 545, 555 (2007).

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“To survive a motion to dismiss, a complaint must contain sufficient factual matter,

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accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal,

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129 S. Ct. 1937, 1949 (2009) (internal quotations and citation omitted). A court is not

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required to accept as true conclusory allegations, unreasonable inferences, or unwarranted

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deductions of fact. Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031

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(9th Cir. 2008). “A claim has facial plausibility when the plaintiff pleads factual content

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that allows the court to draw the reasonable inference that the defendant is liable for the

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misconduct alleged.” Iqbal, 129 S. Ct. at 1949. A pleading that offers “labels and

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conclusions” or “a formulaic recitation of the elements of a cause of action will not do.”

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Bell Atl. Corp., 550 U.S. 555. If a complaint lacks facial plausibility, a court must grant

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leave to amend unless it is clear that the complaint’s deficiencies cannot be cured by

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amendment. Gompper v. VISX, Inc., 298 F.3d 893, 898 (9th Cir. 2002).

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B. Motion to Strike

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Rule 12(f) permits the Court to “[strike] from any pleading any insufficient

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defense or any redundant, immaterial, impertinent, or scandalous matter.” Fed.R.Civ.P.

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12(f). “The function of a 12(f) motion to strike 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

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to trial.” Fantasy, Inc. v. Fogerty, 984 F.2d 1524, 1527 (9th Cir. 1993) (quotations and

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citations omitted). Immaterial matter is matter that “has no essential or important

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relationship to the claim for relief or the defenses being pleaded.” Id. at 1527.

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“[Statements] that do not pertain, and are not necessary, to the issues in question” are

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impertinent. Id. at 1527. Allegations “that unnecessarily reflect [ ] on the moral character

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of an individual or state [ ] anything in repulsive language that detracts from the dignity

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of the court” are considered scandalous. Cobell v. Norton, 224 F.R.D. 1, 5 (D.D.C.

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2005). These “include allegations that cast a cruelly derogatory light on a party or other

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person.” In re 2TheMart.com Secs. Litig., 114 F. Supp. 2d 955, 965 (C.D. Cal. 2000).

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//
Case No. 12-cv-04224 NC
AMENDED ORDER GRANTING
MOTION TO DISMISS

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III. DISCUSSION

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A. Documents Considered by the Court
Wells Fargo requests that the Court take judicial notice of the following documents

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in support of its motion to dismiss: (1) complaint filed in Pedro Brambila v. Wilshire

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Credit Corporation, et al., Contra Costa Superior Court, Case No. CIVMSC10-00111,

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filed on January 12, 2010; (2) copy of the docket in Brambila v. Wilshire Credit

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Corporation, et al., Contra Costa Superior Court, Case No. CIVMSC10-00111; (3) notice

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of ruling regarding Wells Fargo and First Franklin’s demurrer to the complaint, filed in

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Brambila v. Wilshire Credit Corporation, et al., Contra Costa Superior Court, Case No.

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CIVMSC10-00111, filed on July 6, 2010; (4) ex parte application for dismissal as to

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Wells Fargo Bank and First Franklin, filed in Brambila v. Wilshire Credit Corporation, et

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al., Contra Costa Superior Court, Case No. CIVMSC10-00111, filed on July 28, 2010; (5)

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order on ex parte application for dismissal as to Wells Fargo Bank and First Franklin,

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filed in Brambila v. Wilshire Credit Corporation, et al., Contra Costa Superior Court,

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Case No. CIVMSC10-00111, filed on July 28, 2010; (6) judgment of dismissal as to

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Wells Fargo Bank and First Franklin, filed in Brambila v. Wilshire Credit Corporation, et

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al., Contra Costa Superior Court, Case No. CIVMSC10-00111, filed on September 23,

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2010. Def.’s RJN, Exhs. 1-6.

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Although a district court generally may not consider any material beyond the

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pleadings in ruling on a Rule 12(b)(6) motion, the Court may take judicial notice of

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documents referenced in the complaint, as well as matters in the public record, without

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converting a motion to dismiss into one for summary judgment. See Lee v. City of L.A.,

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250 F.3d 668, 688-89 (9th Cir. 2001). A matter may be judicially noticed if it is either

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“generally known within the territorial jurisdiction of the trial court” or “can

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be accurately and readily determined from sources whose accuracy cannot reasonably be

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questioned.” Fed. R. Evid. 201(b); W. Radio Servs. Co. v. Qwest Corp., 530 F.3d 1186,

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1192 n.4 (9th Cir. 2008). Under Federal Rule of Civil Procedure 10(c), a court may take

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judicial notice of “documents whose contents are alleged in a complaint and whose
Case No. 12-cv-04224 NC
AMENDED ORDER GRANTING
MOTION TO DISMISS

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authenticity no party questions, but which are not physically attached to the pleading.”

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Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir. 1994).

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Here, the Court takes judicial notice of all exhibits identified above under Federal

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Rule of Evidence 201 and Federal Rule of Civil Procedure 10(c). See Fed. R. Evid. 201;

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see also Fed. R. Civ. P. 10(c).

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B. Wells Fargo’s Motion to Strike Will be Treated as a Motion to Dismiss

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1. The Court has Authority to Convert a Motion to Strike into a Motion to
Dismiss

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The appropriate medium for challenging the sufficiency of a complaint is through
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Rule 12(b)(6), not Rule 12(f). Consumer Solutions REO, LLC v. Hillery, 658 F. Supp. 2d
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1002, 1020-21 (N.D. Cal. 2009). “However, where a motion is in substance a Rule
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12(b)(6) motion, but is incorrectly denominated as a Rule 12(f) motion, a court may
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convert the improperly designated Rule 12(f) motion into a Rule 12(b)(6) motion.” Id.
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2. Res Judicata is Appropriately Raised Through a Motion to Dismiss
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First, Wells Fargo argues that nine of the Brambilas’ ten causes of action are
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barred by the doctrine of res judicata. Wells Fargo raises the affirmative defense of res
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judicata on a Rule 12(f) motion to strike. See Def.’s Mot. Strike. A Rule 12(b)(6)
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motion, however, is the appropriate vehicle to raise the affirmative defense of res judicata
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where there are no disputed issues of fact. Scott v. Kuhlmann, 746 F.2d 1377, 1378 (9th
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Cir. 1984). Because res judicata is appropriately raised on a motion to dismiss, the Court
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converts Wells Fargo’s motion to strike into a motion to dismiss.
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In considering a motion to dismiss, a court “may take judicial notice of matters of
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public record outside the pleadings.” MGIC Indem. Corp. v. Weisman, 803 F.2d 500, 504
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(9th Cir. 1986). Here, there are no disputed issues of fact. Wells Fargo’s motion to strike
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is premised upon the fact that a final judgment has been rendered in the state court action.
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See Def.’s Mot. Strike. The state court judgment from Brambila I attached to Def.’s RJN
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as exhibit 6, is a matter of public record, and therefore this court may take judicial notice
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of its existence. Because there are no disputed issues of fact, this Court will treat Wells
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Case No. 12-cv-04224 NC
AMENDED ORDER GRANTING
MOTION TO DISMISS

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Fargo’s Rule 12(f) motion as though it was brought as a Rule 12(b)(6) motion.

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C. The Doctrine of Res Judicata Bars Re-litigation of Previously Dismissed Claims

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The Full Faith and Credit Act requires that federal courts give state court

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judgments the same full faith and credit in federal court. 28 U.S.C. § 1738. Thus, when a

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state court issues a final judgment in a case, § 1738 “requires that federal courts give the

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state-court judgment . . . the same preclusive effect it would have had in another court of

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the same State.” Parsons Steel, Inc. v. First Alabama Bank, 474 U.S. 518 (1986).

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Furthermore, when addressing state court judgments, federal courts must “look to the law

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of the rendering State to ascertain the effect of the judgment.” Matsushita Elec. Indus.

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Co., Ltd. v. Epstein, 516 U.S. 367 (1996).

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In California, to properly assert the doctrine of res judicata, a party must show that:

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(1) A claim or issue raised in the present action is identical to a claim or
issue litigated in a prior proceeding; (2) the prior proceeding resulted in a
final judgment on the merits; and (3) the party against whom the doctrine is
being asserted was a party or in privity with a party to the prior proceeding.

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People v. Barragan, 32 Cal. 4th 236, 252-53 (2004). In the present case, nine of
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plaintiffs’ claims are identical to those asserted in Brambila I. See generally Complaint;
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RJN Exh. 1. Additionally, both Pedro and Dominga Brambila were parties to Brambila I.
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Id. Thus, the first and third requirements of res judicata are satisfied.
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The remaining factor is whether “the prior proceeding resulted in a final judgment
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on the merits.” Barragan, 32 Cal. 4th at 253. In determining whether a final judgment on
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the merits occurred, the California Supreme Court has held that:
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“[a] judgment given after the sustaining of a general demurrer on a ground
of substance. . . may be deemed a judgment on the merits, and conclusive in
a subsequent suit; and the same is true where the demurrer sets up the
failure of the facts alleged to establish a cause of action, and the same facts
are pleaded in the second action.”

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Goddard v. Security Title Insur. & Guarantee Co., 14 Cal.2d 47, 52 (1937). Furthermore,
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“[when] a plaintiff elects not to amend the complaint, it is presumed that the complaint
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states as strong a case as is possible; and the judgment of dismissal must be affirmed if
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the unamended complaint is objectionable on any ground raised by the demurrer.”
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Case No. 12-cv-04224 NC
AMENDED ORDER GRANTING
MOTION TO DISMISS

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Otworth v. S. Pac. Transp. Co., 166 Cal. App. 3d 452, 457 (1985) (internal citations

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omitted).

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In the present case, the Brambilas did not amend their complaint, and thus the

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defect on the merits remained. Def.’s RJN, Exh. 2. A final judgment for failure to amend

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the defective complaint in Brambila I was rendered on September 23, 2010. Def.’s RJN,

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Exh. 6. Under Otworth and Goddard, this dismissal constitutes a judgment on the merits

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and is final, satisfying the final element of res judicata.

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As all three elements of res judicata are established, plaintiffs are estopped from
re-litigating those claims in this Court. Accordingly, Wells Fargo’s motion to dismiss the

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Brambilas’ claims for fraudulent misrepresentation, fraudulent inducement, violation of

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the Fair Debt Collection Practices Act, predatory lending practices, breach of

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contract/trust/fiduciary duty, RICO violations, quiet title, declaratory relief, and

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injunctive relief is GRANTED. As there is no set of facts that could plausibly prove no

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final judgment exists in state court, the claims are DISMISSED with prejudice.

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D. Court Declines Jurisdiction over Remaining State Law Claim

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Second, Wells Fargo moves to dismiss the Brambilas’ claim for filing false

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recorded documents on the grounds that it is barred by California’s final judgment rule.

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Def.’s Mot. Strike at 3. Because the Brambilas’ federal claims have been dismissed,

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however, this Court declines to exercise supplemental jurisdiction over the claim for

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filing false recorded documents. “[I]n the usual case in which federal-law claims are

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eliminated before trial, the balance of factors . . . will point toward declining to exercise

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jurisdiction over the remaining state law claims.” Gini v. Las Vegas Metro. Police Dept.,

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40 F.3d 1041, 1046 (9th Cir. 1994).

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While the court dismisses the previously litigated claims with prejudice, the issue

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remains whether the Brambilas’ state law claim for filing false recorded documents is

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dismissed with or without prejudice. “When . . . the court dismisses the federal claim

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leaving only state claims for resolution, the court should decline jurisdiction over the state

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claims and dismiss them without prejudice.” Id. Accordingly, the dismissal of the
Case No. 12-cv-04224 NC
AMENDED ORDER GRANTING
MOTION TO DISMISS

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Brambilas’ claim for filing false recorded documents is without prejudice.
In addition to the motion to strike, Wells Fargo filed a separate motion to dismiss

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the Brambilas’ complaint for failure to state a claim. Dkt. No. 7. Because the Court

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dismisses the complaint under the doctrine of res judicata and jurisdictional grounds, the

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Court does not address the merits of Wells Fargo’s separate motion to dismiss.
IV. CONCLUSION

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Because Plaintiffs’ claims 1, 2, and 4-10 are barred by the doctrine of res judicata,

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Wells Fargo’s motion to dismiss is GRANTED as to these claims, which are

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DISMISSED with prejudice. Because the Court declines to exercise supplemental

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jurisdiction over claim 3, that claim is DISMISSED without prejudice. The case

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management conference scheduled for November 14, 2012 is VACATED and the clerk of

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court is directed to terminate this case.

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IT IS SO ORDERED.

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Date: November 1, 2012

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____________________________
NATHANAEL M. COUSINS
United States Magistrate Judge

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Case No. 12-cv-04224 NC
AMENDED ORDER GRANTING
MOTION TO DISMISS

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