Zacharias v. U.S. Bank N.A. et al

Filing 39

ORDER by Judge Samuel Conti granting in part and denying in part 6 Motion to Dismiss; granting in part and denying in part 10 Motion to Dismiss. (sclc2, COURT STAFF) (Filed on 8/20/2014)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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REYNA U. ZACHARIAS,

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Plaintiff,
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v.
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U.S. BANK N.A.; JP MORGAN CHASE
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BANK, N.A.; BANK OF AMERICA, N.A.; )
AND DOES 1-10, INCLUSIVE,
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Defendants.
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For the Northern District of California

United States District Court

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Case No. 14-02186 SC
ORDER GRANTING IN PART AND
DENYING IN PART JP MORGAN
CHASE BANK, N.A. AND U.S.
BANK, N.A. AS TRUSTEE'S
MOTIONS TO DISMISS
PLAINTIFF'S COMPLAINT

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I.

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INTRODUCTION
Now before the Court are two motions to dismiss Plaintiff

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Reyna U. Zacharias' ("Plaintiff") complaint, ECF No. 1 ("Notice of

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Removal") Ex. 1 ("Compl.").

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Morgan Chase Bank, N.A. ("Chase").

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second was filed by Defendant U.S. Bank, N.A. ("U.S. Bank")1 (1)

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joining in Chase's motion and (2) asserting alternate grounds for

The first was filed by Defendant JP
ECF No. 8 ("Chase MTD").

The

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The Court refers to JP Morgan Chase Bank, N.A. and U.S. Bank,
N.A. collectively as "Defendants."

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dismissal.

ECF No. 10 ("U.S. Bank MTD").

Plaintiff opposes both

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motions.

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motions are fully briefed, ECF Nos. 26 ("Chase Reply"), 28 ("U.S.

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Bank Reply"), 34 ("U.S. Bank Surreply") and appropriate for

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resolution without oral argument.

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reasons set forth below, the motion is GRANTED in part and DENIED

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in part.

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II.

ECF No. 21 ("Chase Opp'n"), 32 ("U.S. Bank Opp'n").

Civ. L.R. 7-1(b).

The

For the

BACKGROUND
In April 2007, Plaintiff obtained a loan from Washington

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United States District Court

For the Northern District of California

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Mutual Bank, F.A. ("WaMu"), secured by a deed of trust (the "DOT")

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encumbering her San Francisco home ("the Property").

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Judicial Notice, ECF No. 7 ("RJN") ¶ 1, Ex. 1 ("DOT").2

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identifies WaMu as the beneficiary and indicates that WaMu lent

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Plaintiff $947,500.

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Reconveyance Company ("CRC") as the trustee.

Request for
The DOT

The DOT also identifies California

The federal government later closed WaMu and appointed the

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Federal Deposit Insurance Corporation ("FDIC") as the bank's

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receiver.

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2008, Chase acquired certain assets and liabilities of WaMu through

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an asset purchase agreement with the FDIC.

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See RJN Ex. 2 ("Purchase Agreement").

Id.

On September 25,

On September 21,

Plaintiff's objections to Defendants' RJN, ECF No. 22 ("RJN
Opp'n"), are OVERRULED, and the Court takes judicial notice of the
DOT and the other publicly filed documents attached to the RJN, but
not the truth of the matters asserted by those documents. Pursuant
to Federal Rule of Evidence 201, the Court may take judicial notice
of "a fact that is not subject to reasonable dispute" because,
among other things, it "can be accurately and readily determined
from sources whose accuracy cannot reasonably be questioned."
Accordingly, the Court "may properly take notice of public facts
and public documents." Cactus Corner, LLC v. U.S. Dep't of Agric.,
346 F. Supp. 2d 1075, 1098 (E.D. Cal. 2004). Additionally,
Plaintiff references many of the documents attached to the RJN in
her complaint and, under the "incorporation by reference doctrine,"
a court may properly consider such documents. See Knievel v. ESPN,
393 F.3d 1068, 1076 (9th Cir. 2005).

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2009, an "Assignment of Deed of Trust" was recorded with the San

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Francisco Assessor-Recorder.

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Assignment").

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interest to WaMu, assigned its interest in the DOT to Bank of

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America ("BofA").

Compl. ¶ 10; RJN Ex. 3 ("DOT

The document states that Chase, as successor in

DOT Assignment.

A notice of default was also recorded on September 21, 2009,

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indicating that Plaintiff was $13,873.88 in arrears on her loan

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payments.

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recorded on December 23, 2009, November 5, 2012, and January 29,

RJN Ex. 4.

Three notices of trustee's sale were later

United States District Court

For the Northern District of California

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2014.

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trustee's sale was scheduled for November 26, 2012, and the unpaid

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balance and other charges on Plaintiff's loan totaled

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$1,082,141.68.

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occurred.

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RJN Exs. 5, 6, 8.

According to the second notice, a

It is unclear whether any trustee's sale has yet

On November 19, 2012, Plaintiff filed an action in California

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Superior Court and the case was subsequently removed on diversity

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and federal question grounds.

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N.A., No. 12-06525 SC, 2013 WL 588757, at *1 (N.D. Cal. Feb. 13,

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2013) ("Zacharias I").

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causes of action against Chase and BofA: (1) slander of title, (2)

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wrongful foreclosure, and (3) violation of the RICO Act.

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Chase and BofA moved to dismiss, and the Court granted the motion,

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dismissing Plaintiff's RICO claims with prejudice, but granting

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leave to amend the claims as to slander of title and wrongful

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foreclosure.

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dismiss Plaintiff's amended claims with the exception of those

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under California Civil Code section 2923.5, and again granted leave

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to amend the slander of title and wrongful foreclosure claims.

Zacharias v. JP Morgan Chase Bank,

In Zacharias I, Plaintiff asserted three

Id. at *2-4.

Id.

The Court again granted a motion to

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Zacharias v. JP Morgan Chase Bank, N.A., No. 12-06525 SC, 2013 WL

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4647349, at *2-3 (N.D. Cal. Aug. 29, 2013) ("Zacharias II").

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Court did, however, dismiss with prejudice certain claims based on

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the enforceability of the DOT and claims seeking recession under

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the Truth in Lending Act ("TILA").

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parties stipulated to dismissal of the action, without prejudice.

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RJN Ex. 14.

On October 29, 2013 the

The instant action was filed in California Superior Court on

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Id.

The

February 19, 2014.

Defendant removed the case to federal court on

United States District Court

For the Northern District of California

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the bases of diversity and federal question jurisdiction.

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1 ("Notice of Removal").

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underlying factual allegations as Plaintiff's earlier action and

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again asserts three causes of action: (1) slander of title, (2)

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wrongful foreclosure, and (3) violation of the RICO Act.

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in addition to Chase and BofA, both of whom were defendants in the

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prior action, the Complaint adds Defendant U.S. Bank in its role as

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the successor in interest to BofA.

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3.

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the undersigned's prior decisions in Zacharias I and Zacharias II,

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this action was deemed related pursuant to Civil Local Rule 3-12,

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and reassigned.

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ECF No.

The Complaint addresses the same

Notably,

Compl. ¶ 4; U.S. Bank Opp'n at

The case was initially assigned to Judge Tigar, but in light of

ECF No. 29.

Chase and U.S. Bank now move jointly and separately to dismiss

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Plaintiff's complaint.

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III. LEGAL STANDARD

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A.

Motions to Dismiss
1.

Rule 12(b)(6)

A motion to dismiss under Federal Rule of Civil Procedure
12(b)(6) "tests the legal sufficiency of a claim."

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Navarro v.

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Block, 250 F.3d 729, 732 (9th Cir. 2001).

"Dismissal can be based

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on the lack of a cognizable legal theory or the absence of

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sufficient facts alleged under a cognizable legal theory."

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Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir.

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1988).

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should assume their veracity and then determine whether they

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plausibly give rise to an entitlement to relief."

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Iqbal, 556 U.S. 662, 679 (2009).

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must accept as true all of the allegations contained in a complaint

"When there are well-pleaded factual allegations, a court

Ashcroft v.

However, "the tenet that a court

United States District Court

For the Northern District of California

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is inapplicable to legal conclusions.

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elements of a cause of action, supported by mere conclusory

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statements, do not suffice."

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Twombly, 550 U.S. 544, 555 (2007)).

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generally "limited to the complaint, materials incorporated into

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the complaint by reference, and matters of which the court may take

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judicial notice."

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540 F.3d 1049, 1061 (9th Cir. 2008) (citing Tellabs, Inc. v. Makor

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Issues & Rights, Ltd., 551 U.S. 308, 322 (2007)).

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2.

Threadbare recitals of the

Id. (citing Bell Atl. Corp. v.
The court's review is

Metzler Inv. GMBH v. Corinthian Colls., Inc.,

Rule 12(b)(7)

A party may move to dismiss a case for "failure to join a

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party under Rule 19."

Fed. R. Civ. P. 12(b)(7).

On such a motion

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there is a three-step inquiry: (1) is the absent party required (or

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"necessary") within the meaning of Rule 19(a)?, (2) is joinder of

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the absent party "feasible," under Rule 19(a)? and (3) if joinder

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is not feasible, is the absent party indispensable, such that the

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action must be dismissed?

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Power Dist. v. Lee, 672 F.3d 1176, 1179 (9th Cir. 2012).

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Ninth Circuit has held that a court should grant a 12(b)(7) motion

Salt River Project Agric. Improvement &

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"The

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to dismiss only if the court determines that joinder would destroy

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jurisdiction and the nonjoined party is necessary and

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indispensable."

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Supp. 2d 1136, 1141 (E.D. Cal. 2001) (citing Shermoen v. United

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States, 982 F.2d 1312, 1317-18 (9th Cir. 1992)).

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the moving party to produce evidence in support of the motion.

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Id.; see also Makah Indian Tribe v. Verity, 910 F.2d 555, 558 (9th

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Cir. 1990).
B.

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United States District Court

The burden is on

Leave to Amend

When a motion to dismiss is granted, a district court must

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For the Northern District of California

Biagro W. Sales Inc. v. Helena Chem. Co., 160 F.

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decide whether to grant leave to amend.

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Circuit has a liberal policy favoring amendments and, thus, leave

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to amend should be freely granted.

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Freight Sys., Inc., 957 F.2d 655, 658 (9th Cir. 1992).

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court does not need to grant leave to amend in cases where the

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court determines that permitting a plaintiff to amend would be an

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exercise in futility.

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Winery, 829 F.2d 729, 738 (9th Cir. 1987) ("Denial of leave to

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amend is not an abuse of discretion where the pleadings before the

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court demonstrate that further amendment would be futile.").

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IV.

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Generally, the Ninth

See, e.g., DeSoto v. Yellow
However, a

See, e.g., Rutman Wine Co. v. E. & J. Gallo

DISCUSSION
In its motion, Chase raises two grounds for dismissing

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Plaintiff's complaint.

First, they contend that each of

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Plaintiff's causes of action for slander of title, wrongful

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foreclosure, and violations of the RICO Act, as well as certain

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other claims under the California Homeowner's Bill of Rights

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("HBOR"), Dodd-Frank Act, and National Mortgage Settlement

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Agreement are, inter alia, untimely, legally insufficient, or

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barred by claim preclusion.

Second, Chase argues that dismissal is

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appropriate because Plaintiff has not joined an indispensable

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party, her co-borrower under the DOT, Leo Danny Portal.

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joins in Chase's arguments, and also raises several additional

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issues specific to its own role as successor in interest to BofA.

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The Court will address each of Plaintiff's substantive claims

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before discussing the joinder issue.

U.S. Bank

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A.

Slander of Title

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To state a claim for slander of title, Plaintiff must show

United States District Court

For the Northern District of California

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four elements: (1) a publication, (2) without privilege or

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justification, (3) which is false, and (4) which causes direct and

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immediate pecuniary loss.

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4th 461, 472 (Cal. Ct. App. 2012).

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Plaintiff's claims are time-barred and, in any event, Plaintiff has

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not sufficiently pleaded the last three elements of her cause of

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action.

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Court need not analyze Chase's merits arguments.

Chase argues that portions of

Because the Court finds these claims are time-barred, the

1.

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La Jolla Grp. II v. Bruce, 211 Cal. App.

Timing

Chase argues that because the Assignment and Notice of Default

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("NOD") were recorded in September 2009 and this action was not

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filed until February 19, 2014, any slander of title claims based on

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the DOT, Assignment, and NOD are barred by the applicable three-

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year statute of limitations.

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Chase notes that because the Court previously granted Plaintiff

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leave to amend to show why the statute of limitations should tolled

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and Plaintiff did not do so, no further leave to amend should be

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granted.

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*3).

Cal. Code Civ. P. § 338(g).

Further,

Chase MTD at 5 (citing Zacharias II, 2013 WL 4647349, at

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Plaintiff responds that her slander of title claim was

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equitably tolled under the delayed discovery rule.

Chase Opp'n at

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4.

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limitations is tolled until "plaintiff discovers or should have

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discovered all facts essential to his cause of action." Leaf v.

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City of San Mateo, 104 Cal. App. 3d 398, 406 (Cal. Ct. App. 1980).

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Plaintiff argues that she did not discover the facts underlying the

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slander of title claim on the assignment and foreclosure notices

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"until she brought her state court action challenging foreclosure

Under the delayed discovery rule, the applicable statute of

United States District Court

For the Northern District of California

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proceedings on or around November 2012."

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particular, Plaintiff suggests that because she had "no reason to

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investigate the legitimacy of the recorded documents on the Subject

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Property until she consulted with legal counsel about the

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possibility of bringing legal action against Defendants," the

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delayed discovery rule should apply.

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Not so.

Opp'n at 4.

In

Id. at 4-5.

As Chase notes, Plaintiff must "'specifically plead

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facts to show (1) the time and manner of discovery and (2) the

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inability to have made earlier discovery despite reasonable

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diligence.'"

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3610745, at *2 (N.D. Cal. Aug. 17, 2011) (quoting E-Fab, Inc. v.

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Accountants, Inc. Servs., 153 Cal. App. 4th 1308, 1324 (Cal. Ct.

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App. 2007)) (emphasis added).

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explanation as to each of these requirements in her opposition

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brief, she has not pleaded any facts regarding the application of

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the delayed discovery rule.

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even if Plaintiff had pleaded the facts offered in her opposition,

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her allegations would still be insufficient to establish the

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application of the delayed discovery rule.

Howl v. Bank of Am., N.A., No. C 11-0887 CW, 2011 WL

While Plaintiff has asserted a basic

This is insufficient.

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Furthermore,

After all, Plaintiff

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explicitly states that the documents upon which these claims are

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based were publicly recorded with the San Francisco County

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Recorder's Office.

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reasonable diligence would not have revealed the facts underlying

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Plaintiff's claims against the DOT, assignment, and NOD.

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Accordingly these claims must be DISMISSED as time-barred.

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Given that, the Court cannot conclude that

Further, Chase argues that because Plaintiff failed to heed

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the Court's instructions to cure these issues previously, the Court

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should dismiss these allegations with prejudice.

Contrary to

United States District Court

For the Northern District of California

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Plaintiff's view, this argument is not "disingenuous."

Opp'n at 5.

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Simply because the parties stipulated to dismissal of the prior

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action does not mean that in filing a new (and otherwise

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significantly amended) complaint alleging the same basic facts,

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Plaintiff need not heed the Court's warning to amend her pleadings

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to explain why the statute of limitations should be tolled.

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ignored the Court's prior instructions on this point, and finding

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that Plaintiff's explanation would be insufficient even if the

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Court were to grant leave to amend, these claims are DISMISSED WITH

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PREJUDICE.

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B.

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Having

Wrongful Foreclosure

Chase raises similar issues with Plaintiff's wrongful

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foreclosure claims.

Specifically, Chase argues that because

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Plaintiff has not alleged that a foreclosure sale has taken place,

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her claim is premature.

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C 13-3381 MMC, 2014 WL 1648619, at *3 (N.D. Cal. Apr. 24, 2014)

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("[A] cause of action for wrongful foreclosure is 'premature' where

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no foreclosure sale has taken place."); Rosenfeld v. J.P. Morgan

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Chase Bank, N.A., 732 F. Supp. 2d 952, 961 (N.D. Cal. 2010) ("A

See, e.g., Rothman v. U.S. Bank N.A., No.

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lender or foreclosure trustee may only be liable to the mortgagor

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or trustor for wrongful foreclosure if the property was

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fraudulently or illegally sold under a power of sale contained in a

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mortgage or deed of trust.").
Once again, Chase is right.

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"Plaintiff . . . fails to state a

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claim for wrongful foreclosure because [s]he does not allege a

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foreclosure sale has taken place."

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No. 11-2922 SC, 2011 WL 5573894, at *9 (N.D. Cal. Nov. 15, 2011)

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(Conti, J.); see also Nissim v. Wells Fargo Bank, N.A., No. C 12-

Pey v. Wachovia Mortg. Corp.,

United States District Court

For the Northern District of California

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1201 CW, 2013 WL 192903, at *9 (N.D. Cal. Jan. 17, 2013);

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Chancellor v. OneWest Bank, NO. C 12-01068 LB, 2012 WL 1868750, at

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*8 (N.D. Cal. May 22, 2012); Vega v. JPMorgan Chase Bank, N.A., 654

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F. Supp. 2d 1104, 1113 (E.D. Cal. 2009).

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Plaintiff's opposition are not to the contrary.

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Plaintiff cites language from Castillo v. Skoba, No. 10cv1838 BTM,

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2010 WL 3986953, at *2 (S.D. Cal. Oct. 8, 2010) stating that "[t]he

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power of sale in a nonjudicial foreclosure may only be exercised

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when a notice of default is recorded, . . . [and] any foreclosure

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sale based on a void notice of default is also void."

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at 8.

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whether a wrongful foreclosure claim is cognizable prior to a

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foreclosure sale.

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one circumstance in which a foreclosure may be void, not whether a

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plaintiff may bring a wrongful foreclosure claim prior to any

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foreclosure sale.

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C-11-2899 EMC, 2011 WL 6294472 (N.D. Cal. Dec. 15, 2011) (analyzing

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a wrongful foreclosure claim prior to a foreclosure sale without

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discussing whether a claim is appropriate prior to a foreclosure

The three cases cited in
For instance,

Chase Opp'n

This may well be true, but Castillo does not even discuss

To the contrary, the quoted language explains

See also Tamburri v. Sun Tr. Mortg., Inc., No.

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sale); Sacchi v. Mortg. Elec. Registration Sys., Inc., No. CV 11-

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1658 AHM (CWx), 2011 WL 2533029, at *7-8 (C.D. Cal. June 24, 2011)

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(same).

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Furthermore, as with Plaintiff's earlier slander of title

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claim, the Court previously dismissed identical claims with leave

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to amend "so that she may allege whether and when the foreclosure

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sale occurred."

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again failed to heed the Court's instruction, Plaintiff's wrongful

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foreclosure claims are DISMISSED WITH PREJUDICE.

Zacharias II, 2013 WL 4647349, at *3.

Having

United States District Court

For the Northern District of California

10

C.

California Civil Code Section 2923.5

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Next, Chase argues that Plaintiff's allegations under

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California Civil Code Section 2923.5 are also untimely.

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previously denied a motion to dismiss similar claims, finding that

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Plaintiff's allegations under Section 2923.5 were not preempted.

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Zacharias II, 2013 WL 4647349, at *3 (citing Pey, 2011 WL 5573894,

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at *8-9; Shaterian v. Wells Fargo Bank, N.A., C-11-0920 SC, 2011 WL

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2314151, at *4 n.8 (N.D. Cal. June 10, 2011)).

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that because the events underlying any claim for violations of

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Section 2923.5 would have to have taken place prior to September

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21, 2009 when the NOD was recorded, and this action was filed

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February 19, 2014, these claims are barred by the applicable three

22

year statute of limitations.

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The Court

Now, Chase contends

Cal. Code Civ. P. § 338(a).

Plaintiff completely failed to respond to Chase's argument.

24

Furthermore, neither party cites any case law in support or defense

25

of their claims.

26

that Plaintiff may have inadvertently time-barred her own claim by

27

voluntarily dismissing the earlier action.

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Valley Hosp. Med. Ctr., 67 Cal. App. 4th 978, 984-85 (Cal. Ct. App.

Nonetheless, the Court's initial review suggests

11

See Martell v. Antelope

1

1998) (noting that equitable tolling does not apply where a

2

plaintiff voluntarily dismisses a timely claim and then pursues a

3

successive claim in the same forum); see also Prettyman v. City of

4

San Diego Police Dep't, No. 11-cv-00195-MMA (RBB), 2012 WL 959472,

5

at *5 (S.D. Cal. Mar. 21, 2012) ("Accordingly, if a plaintiff

6

voluntarily dismisses a timely filed action, equitable tolling

7

cannot save a second action filed after the limitations period has

8

expired.") (collecting cases).

9

Plaintiff's claims under Section 2923.5.

Accordingly, the Court DISMISSES
Without a more developed

United States District Court

For the Northern District of California

10

record, the Court cannot say with certainty whether amendment would

11

be futile, and accordingly the dismissal is WITHOUT PREJUDICE.

12

Plaintiff is granted leave to amend to explain how, if at all, the

13

statute of limitations should be tolled.

14

notes that the leave granted here is solely leave to amend the

15

Section 2923.5 claims, and not blanket leave to add new causes of

16

action or legal theories.

17

n.2 (noting unauthorized amendments to Plaintiff's previous

18

complaint).

Nevertheless, the Court

See Zacharias II, 2013 WL 4647349, at *2

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D.

RICO Act

20

Next, Chase points out that in Zacharias I, the Court

21

dismissed Plaintiff's claims under the RICO Act, 18 U.S.C. Section

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1962(c) with prejudice.

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Chase argues this cause of action is barred by claim preclusion.

24

Claim preclusion applies when there is "1) an identity of claims,

25

2) a final judgment on the merits, and 3) identity or privity

26

between the parties."

27

F.3d 1189, 1192 (9th Cir. 1997).

28

2013 WL 588757, at *3-4.

As a result,

W. Radio Servs. Co., Inc. v. Glickman, 123

Here, the elements of claim preclusion are satisfied.

12

First,

1

Plaintiff's claims are not just identical in their underlying facts

2

and legal theory, rather Plaintiff's third cause of action is

3

worded identically to her complaint in Zacharias I.

4

pp. 9-15,3 with RJN Ex. 9 ("Zacharias I Compl.") at ¶¶ 31-58.

5

Second, the Court's dismissal with prejudice in Zacharias I

6

operates as a final judgment on the merits for the purpose of claim

7

preclusion.

8

Cir. 2002) ("The phrase 'final judgment on the merits' is often

9

used interchangeably with 'dismissal with prejudice.'").

Compare Compl.

See Stewart v. U.S. Bancorp, 297 F.3d 953, 956 (9th

Finally,

United States District Court

For the Northern District of California

10

the third element, identity or privity between the parties, is also

11

satisfied here.

12

brought against Chase and BofA as trustee for the WaMu Mortgage

13

Pass-Through Certificates.

14

Plaintiff brings her RICO claims against U.S. Bank, which was the

15

subject of a substitution of trustee recorded on January 22, 2014.

16

See RJN Ex. 7 ("SOT").

17

that U.S. Bank is the successor in interest to BofA, and therefore

18

is in direct privity with the parties to Zacharias I.

19

also Headwaters Inc. v. United States Forest Serv., 399 F.3d 1047,

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1053 (9th Cir. 2005) (stating that privity extends to successors in

21

interest).

Plaintiff's RICO claims in Zacharias I were

See Zacharias I Compl. ¶ 5.

Here,

The substitution of trustee establishes

Id.; see

Accordingly the three elements of claim preclusion are

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23

satisfied in this case, and therefore Plaintiff's claims under the

24

RICO Act are DISMISSED WITH PREJUDICE.

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26
27
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3

In fact, the only difference between the RICO count in the
instant complaint and the RICO claims in Zacharias I is the use of
bullet points rather than paragraph numbers. Accordingly, the
Court cites to page numbers rather than paragraph numbers for this
portion of the complaint.

13

1

E. Violations of the California Homeowner's Bill of Rights,

2

Dodd-Frank Act, and National Mortgage Settlement

3

Agreement

4

In addition to her three specific causes of action,

5

Plaintiff's complaint and briefing also include allegations that

6

Defendants have violated various subsections of the California

7

Homeowner's Bill of Rights ("HBOR"), the Dodd-Frank Act, and the

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National Mortgage Settlement Agreement.

9

The Complaint does not seem to treat these as standalone causes of

Compl. ¶¶ 30-31, 33-37.

United States District Court

For the Northern District of California

10

action, instead citing them as support for Plaintiff's premature

11

wrongful foreclosure claims.

12

allegations as stating any cause of action independent of those

13

dismissed above, even if Plaintiff were seeking to assert

14

independent causes of action on this basis, their allegations are

15

entirely conclusory.

16

recitals of the elements of a cause of action, supported by mere

17

conclusory statements, do not suffice."). Accordingly these claims

18

are DISMISSED.

19

While the Court does not read these

See Iqbal, 556 U.S. at 679 ("Threadbare

Recognizing the insufficiency of these claims, Plaintiff

20

requests leave to amend "to state claims for new causes of action

21

arising out of Defendants' breach of the California HBOR, both in

22

the loan modification and foreclosure process."

23

As her opposition brief points out, Plaintiff filed the operative

24

complaint pro se, and as a result she believes granting leave to

25

amend would be in the interest of justice.

26

opposition to U.S. Bank's motion to dismiss, Plaintiff mentions for

27

the first time her intention to seek leave to amend to allege a

28

violation of the HBOR's prohibition on 'dual tracking,' or

14

Id.

Chase Opp'n at 11.

Similarly, in her

1

attempting to foreclose while a loan modification remains pending.

2

See Cal. Civ. Code § 2923.6; U.S. Bank Opp'n at 5.

3

The Court has previously granted Plaintiff two opportunities

4

to amend various portions of her complaint to cure specifically

5

defined deficiencies.

6

prior action, Plaintiff again seeks leave to amend deficiencies in

7

her complaint.

8

pronouncement in Foman v. Davis, 371 U.S. 178, 182 (1962), that

9

leave to amend should be freely granted.

Now, following voluntary dismissal of the

The Court is mindful of the Supreme Court's

Nevertheless where, as

United States District Court

For the Northern District of California

10

here, Plaintiff has "repeatedly fail[ed] to cure deficiencies by

11

amendments previously allowed," dismissal with prejudice may be

12

appropriate.

13

limited leave to amend granted by the Court to drastically expand

14

her claims and plead entirely new causes of action, see Zacharias

15

II, 2013 WL 4647349, at *2 n.2 (noting unauthorized amendments to

16

Plaintiff's previous complaint), and also asserted claims in her

17

briefing that were not pleaded.

18

ECF No. 45 ("Zacharias II Opp'n") at 17 (raising unpleaded

19

violations of the Fair Debt Collection Practices Act for the first

20

time in an opposition brief).

21

themselves sufficient to find that Plaintiff and her counsel have

22

acted in "bad faith" or with a "dilatory motive," as discussed in

23

Foman, when coupled with Plaintiff's repeated failure to cure

24

defects, they weigh against granting leave to amend.

25

to the extent Plaintiff asserts further violations of the

26

California HBOR, Dodd-Frank Act, and National Mortgage Settlement

27

Agreement, these claims are DISMISSED WITH PREJUDICE.

28

Plaintiff's request for leave to amend to allege further violations

Id.

Furthermore, Plaintiff has previously used

See Zacharias II, No. 12-06525,

While these actions are not

15

Accordingly,

Further,

1

of the California HBOR is DENIED.

2

F.

Failure to Join Plaintiff's Co-Borrower

3

Finally, both Chase and U.S. Bank argue that joinder of

4

Plaintiff's co-borrower under the DOT, Leo Danny Portal, is

5

required under Federal Rule of Civil Procedure 19.

6

grounds for this conclusion.

7

states there is a "substantial risk" they may "'incur[] double,

8

multiple, or otherwise inconsistent obligations . . . .'"

9

MTD at 15 (citing Fed. R. Civ. P. 19(a)(1); Mottale v. Kimball

They assert two

First, in Portal's absence, Chase

Chase

United States District Court

For the Northern District of California

10

Tirey & St. John, LLP, No. 13cv1160-GPC-JMA, 2013 WL 5570193, at *7

11

(S.D. Cal. Oct. 9, 2013)).

12

directly tie its argument to the specific subsection of Rule 19, it

13

seems to contend that because Plaintiff is seeking monetary and

14

declaratory relief with regard to the Property, and Portal "remains

15

a Borrower and Trustor on the Loan and DOT," adjudicating the case

16

in Portal's absence would "impair or impede [Portal's] ability to

17

protect [his] interest . . . ."

18

19(a)(1)(B)(i); U.S. Bank MTD at 4.4

19

Bank contend that Portal is required5 to be joined under Rule

20

4

21
22
23
24
25
26
27
28

Second, while U.S. Bank does not

See Fed. R. Civ. P.
As a result, Chase and U.S.

Plaintiff did not respond to Chase or U.S. Bank's arguments on
the joinder issue in her first responsive brief (addressing Chase's
motion to dismiss), but did discuss at least U.S. Bank's arguments
in her opposition to U.S. Bank's motion to dismiss. While U.S.
Bank complains that the brief was untimely, in light of the
convoluted procedural history of these motions, and the fact that
the most recent minute entry for the motion specifies that
responses were to be due on June 30, 2014, See ECF No. 31, the date
on which Plaintiff filed her opposition, the Court will consider
the arguments presented. Furthermore, given that U.S. Bank took
the opportunity to respond, ECF No. 34 ("U.S. Bank Surreply"), the
Court does not believe there is any prejudice in considering the
arguments offered in either brief.
5

The term "required party" supplanted the longstanding term
"necessary party" in the 2007 amendments to the Federal Rules of
Civil Procedure. Compare Shields v. Barrow, 58 U.S. (17 How.) 130,

16

1

19(a), is indispensable to the action, and as a result, the action

2

should be dismissed under Federal Rule of Civil Procedure 12(b)(7).

3

Unfortunately both sides misunderstand the nature of the

offered some reasons why Portal might be considered a required

6

party under Rule 19, neither Plaintiff nor Defendants have offered

7

any analysis of the remaining two steps of the Rule 19 inquiry.

8

Without any explanation as to whether (1) it is feasible to join

9

Portal, or, (2) if joinder is infeasible, whether the action can

10

United States District Court

inquiry under Rule 19 and Rule 12(b)(7).

5

For the Northern District of California

4

proceed without him, the Court cannot conclude that dismissal is

11

appropriate.

12

three-step inquiry under Rule 19).

13

moving parties, they have the burden of persuasion as to each of

14

these elements.

15

the burden of persuasion in arguing for dismissal.") (citing Sierra

16

Club v. Watt, 608 F. Supp. 305, 312 (E.D. Cal. 1985)); Brum v.

17

Cnty. of Merced, No 1:12-cv-01636-AWI-KSO, 2013 WL 2404844, at *3-4

18

(E.D. Cal. May 31, 2013) (discussing the allocation of burdens of

19

proof on a motion under Rule 19 and noting the consensus that the

20

moving party bears the burden of persuasion).

21

Defendants' Rule 12(b)(7) motion to dismiss is DENIED.

22

While Defendants have

See Salt River, 672 F.3d at 1179 (laying out the
Because the Defendants are the

See Makah, 910 F.2d at 558 ("The moving party has

Accordingly,

Nonetheless, the Court still must go through the first step of

23

the Rule 19 inquiry, and determine whether Portal is a required

24

party.

25

joined as required, the court must order that the person be made a

26
27
28

See Fed. R. Civ. P. 19(a)(2) ("If a person has not been

139 (1854) (defining "necessary" and "indispensable" parties), with
4 Moore's Fed. Prac. § 19.02[2][c] (3d ed.). While the parties use
the old terminology, the Court will use the new term "required
party." In any event, the terms "necessary party" and "required
party" are synonymous.

17

1

party.").

Defendants argue that the two prongs of Rule 19(a)(1)(B)

2

apply, and adjudicating the case in Portal's absence would (1)

3

would "impair or impede" Portal's ability to protect his interests

4

or (2) expose Defendants to "a substantial risk of incurring

5

double, multiple, or otherwise inconsistent obligations . . . ."

6

Ultimately, the Court concludes Portal is not a required party.

7

As a threshold matter, Plaintiff argues that Portal has not

8

claimed an "interest relating to the subject of the action," and

9

therefore he is not a required party.

Specifically, Plaintiff

United States District Court

For the Northern District of California

10

argues, seizing on language from United States v. Bowen, 172 F.3d

11

682, 689 (9th Cir. 1999) that "[j]oinder is 'contingent . . . upon

12

an initial requirement that the absent party claim a legally

13

protected interest relating to the subject matter of the action.'"

14

(quoting Northrop Corp. v. McDonnell Douglas Corp., 705 F.2d 1030,

15

1043 (9th Cir. 1983)) (emphasis in original); see also Thomas, Head

16

& Griesen Emps. Tr. v. Buster, 95 F.3d 1449, 1460 n.18 (9th Cir.

17

1996); United States ex rel. Morongo Band of Mission Indians v.

18

Rose, 34 F.3d 901, 908 (9th Cir. 1994); Lopez v. Fed. Nat'l Mortg.

19

Ass'n, No. CV 13-04782 MMM (AGRx), 2013 WL 7098634, at *6 (C.D.

20

Cal. Oct. 8, 2013); In re Wells Fargo Residential Mortg. Lending

21

Discrimination Litig., No. M:08-CV-1930 MMC, 2009 WL 2473684, at *2

22

(N.D. Cal. Aug. 11, 2009).

23

claim an interest in the action, Plaintiff reasons that he is not a

24

required party.

25

reading of Rule 19,6 but for better or worse it appears to be the

26

6

27
28

Because Portal has not come forward to

The Court is skeptical that this is the best

As other courts have noted, the Ninth Circuit's requirement that
an absent party affirmatively claim an interest in the subject of
the action is often in conflict with the underlying purposes of
Rule 19. See Ins. Co. of Pa. v. LNC Cmtys. II, LLC, No. 11-cv00649-MSK-KMT, 2011 WL 5548955, at *7 (D. Colo. Aug. 23, 2011).

18

1

law of the Ninth Circuit.

2

because Portal has not claimed an interest in the action he is not

3

a required party, and therefore Portal need not be joined.

4

V.

CONCLUSION
For the reasons set forth above, the Court GRANTS Chase's and

5
6
7

U.S. Bank's motions to dismiss and ORDERS as follows:




United States District Court

For the Northern District of California

Plaintiff's wrongful foreclosure claims are premature and
accordingly DISMISSED WITH PREJUDICE.

10
11

Plaintiff's slander of title claims are DISMISSED WITH
PREJUDICE.

8
9

Accordingly, the Court finds that



Plaintiff's RICO Act claims are precluded and accordingly

12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

Specifically, "it would be strange to require that an absent party
affirmatively claim their interest in the subject of the action.
This approach would seemingly offer Rule 19(a)(1)(B)(i)'s
protections only to those absent parties who actually know of the
litigation where they were not named as a party." Id. (emphasis in
original). Furthermore, the affirmative claim requirement can also
give rise to some puzzling interactions with Rule 24(a)'s
provisions for intervention as of right. For instance, by
requiring an absent party to assert a claim that their interests
may be impaired or impeded by a pending action to benefit from
compulsory joinder under Rule 19(a)(1)(B)(i) when such a party
"would always satisfy the prerequisites for intervention as of
right . . . ," Navajo Tribe of Indians v. New Mexico, 809 F.2d
1455, 1472 (10th Cir. 1987), the affirmative claim rule becomes
almost duplicative of Rule 24(a). But "[t]he purpose of Rule 19,
however is not to exhort an interested party to exercise its Rule
24 rights." Id. Instead, the purpose of the rule is served by a
flexible analysis that recognizes that absent parties will not
always be able to assert a claim in the subject matter of the
action because they will not always know of a pending action that
may impair or impede their rights. Stranger still, the Court sees
no reason on the face of these Ninth Circuit precedents suggesting
that an affirmative claim by the absent party would not also be
required in cases under Rule 19(a)(1)(B)(ii), which protects a
defendant who may be subject to inconsistent obligations if an
absent party is not joined. This seems even further afield from
the intended purpose of the Rule, which focuses on potential
prejudice to the present defendants, not the interests of the
absent party. 4 Moore's Fed. Prac. § 19.03[4][a] (3d ed.) (noting
that this clause of the rule "is primarily concerned with the
threat posed to defendants by the nonjoinder of the absentee")
(emphasis in original).

19

DISMISSED WITH PREJUDICE.

1
2



Plaintiff's claims under California Civil Code Section 2923.5

3

are DISMISSED as time-barred.

4

to enable Plaintiff to plead why, if at all, the statute of

5

limitations should be tolled.

6



Defendants' motion to dismiss for failure to join Plaintiff's
co-borrower, Leo Danny Portal, is DENIED.

7
8

Leave to amend is GRANTED only



Plaintiff's claims for violations of the California
Homeowner's Bill of Rights, the Dodd-Frank Act, and the

9

United States District Court

For the Northern District of California

10

National Mortgage Settlement Agreement are DISMISSED WITH

11

PREJUDICE.

12

additional claims under the California Homeowner's Bill of

13

Rights is DENIED.

14
15



Plaintiff's request for leave to amend to bring

Plaintiff shall file her amended complaint within thirty (30)
days of the signature date of this order.

16
17

IT IS SO ORDERED.

18
19
20

Dated: August 20, 2014
UNITED STATES DISTRICT JUDGE

21
22
23
24
25
26
27
28

20