Patel v. U.S. Bank, N.A. et al

Filing 54

ORDER by Judge Yvonne Gonzalez Rogers denying 34 Motion for Leave to File Amended Complaint; Dismissing Case. (fs, COURT STAFF) (Filed on 11/5/2013)

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1 2 3 4 5 UNITED STATES DI D ISTRICT COU URT 6 NORTHER DISTRICT OF CALIFO RN T ORNIA 7 8 9 10 United States District Court Northern District of California 11 CHE ETANN PATE AND HAR EL RSHIKA PATE , EL Plaintiff, 12 v. 13 14 O RDER DENY YING PLAINT TIFFS’ MOTI ION FOR LEAVE TO FI AMENDE COMPLAI ; ILE ED INT D DISMISSING CASE G U.S. BANK, N.A et al., A., Defe endants. 15 16 C Case No.: 13 3-CV-1625 Y YGR I. INTROD DUCTION 17 Plaintiff Chetann Patel and Har fs rshika Patel b bring this ac ction challen nging the pen nding 18 fore eclosure of th home, naming as de heir n efendants U.S Bank, N.A As Trustee For Citig S. A., group 19 Mor rtgage Loan Trust, Inc., Asset-Backe Pass-Thro ed ough Certific cates, Series 2006-HE1; Wells s ; 20 Farg Bank, N.A Mortgage Electronic Registration Systems, I go A.; c n Inc., and Quality Loan S Service Corp. 21 Plaintiffs’ initial complaint, filed April 10, 2013, as serted eight causes of ac ction against these t 22 defe endants.1 Tw defendan groups file motions t dismiss an on June 14, 2013, the Court wo nt ed to nd, e 23 gran those motions. (Dk No. 31 (“J nted m kt. June 14 Orde er”).) In doi so, the C ing Court found t the that 24 Pate had previ els iously filed a complaint in Alameda County Sup i perior Court “against all the 25 defe endants here based upon the same se of facts an the same b et nd basic theorie as alleged herein,” and es d 26 that the state cou had dism urt missed that ca with prej ase judice in Sep ptember 201 12. (Id. at 2; see also 27 1 28 Fo ollowing the filing of the initial com eir mplaint, the P Patels also f filed three ap pplications fo ex parte for restr raining order halting the foreclosure sale. (Dkt Nos. 5, 19, 37-38 (TRO applications).) None rs t. , O of th hese applicat tions had me erit. (See Dk Nos. 11, 33, 42 (orde denying a kt. ers applications) ).) 1 Dkt. No. 15-15 (Judgment entered again Patels by Alameda C e nst y County Super Court).) The Court rior 2 ackn entirely barr by res nowledged th the Patel had conce hat ls eded that thei initial com ir mplaint was e red 3 judicata, but tha they never at rtheless soug leave to a ght amend to add a TILA cla that wou not be d aim uld 4 prec cluded. (Jun 14 Order at 3.) The Court gave th Patels lea to amend but stated t any ne C he ave d that 5 claim based on the “securitization argum m t ments” raised in both the initial federal complain and the d e nt 6 dism missed state court action were barred by res judic c d cata. (Id. at 4.) The Cou also warn that urt ned 7 Plaintiffs bore th burden of establishing why the on he f g ne-year statu of limitat ute tion for TILA claims A 8 shou be tolled (See id.) The Court ga the Pate until July 8, 2013, to file a motion for leave to uld d. T ave els n o 9 ame and instr end ructed: “A pr roposed ame ended compl laint, deletin the allegat ng tions related to the d dism missed claim and adding new allega ms g ations to sup port the new TILA claim must be a w m, attached as 11 United States District Court Northern District of California 10 an exhibit to the motion. Th allegation and the m e e he ns motion must a address clear and speci rly ifically why 12 the claims are not barred by res judicata and the stat c y a tute of limita ations . . . .” (Id. at 5.) On July 7, 2013, Pla aintiffs timely filed their motion for l leave to file an amended complaint, d 13 14 and lodged the amended ple a eading they seek to file. (Dkt. No. 34 (“Motion” Dkt. No. 36 s ”), 15 (Pro oposed Amen nded Compl laint (“PAC” ”)).) The Mo otion is fully briefed (Dk Nos. 45 (“ y kt “Opp’n”), 46 6 16 (“Re eply”)), and the Court to oral argu ook ument on Au ugust 27, 201 (Dkt. No. 51). For th reasons 13 . he 17 set forth below, the Motion is DENIED. f 18 II. 19 DISCUS SSION Federal Rule of Civi Procedure 15 requires that a plaint obtain either consent of the R il tiff t 20 defe endant or lea of court to amend its complaint o ave t s once the defe fendant has a answered, bu “leave ut 21 shal be freely given when ju ll g ustice so req quires.” Fed R. Civ. P. 15(a); see al Chodos v West Pub. d. lso v. 22 Co., 292 F.3d 99 1003 (9th Cir. 2002) (leave to am , 92, ) mend granted with “extr reme liberalit ty”). One 23 exce eption to this general rul of liberalit however, is where am s le ty, , mendment w would be futile. Foman 24 v. Davis, 371 U.S. 178, 182 (1962); Smi v. Pac. P D ith Props. & Dev Corp., 358 F.3d 1097, 1101 (9th v. 8 25 Cir. 2004). Thu a district court does not err in refu us, n using to gran leave to am nt mend after “ “reasonably 26 clud[ing] tha further am at mendment wo ould be futil e.” Sylvia L Landfield Tru v. City of Los ust f conc 27 Ang geles, --- F.3d ---, 2013 WL 4779664 (9th Cir. Se 9, 2013) d W 4 ept. ). 28 2 1 Here, the Court concludes that permitting Plaintiffs to file their Proposed Amended 2 Complaint would be futile because the TILA claim set forth therein is barred by res judicata.2 As 3 the Court explained in its June 14 Order, res judicata bars relitigation of claims where there is (1) 4 identity of claims, (2) identity of parties, and (3) a final judgment on the merits. Res judicata bars 5 not only claims that actually were previously litigated, but also claims that could have been 6 previously litigated, arising out of the “same transactional nucleus of fact.” Further, “[p]ursuing 7 new legal theories does not create a new cause of action sufficient to avoid res judicata.” June 14 8 Order at 2-3 (citations omitted). Res judicata bars the Patels’ TILA claim because it could have been asserted against the 9 same parties in the earlier state court litigation. In view of the fact that TILA claims arise from a 11 United States District Court Northern District of California 10 failure to provide disclosures at the time a loan closes, the Patels have articulated no persuasive 12 reason why any TILA violation could not have been discovered prior to filing of the state court 13 complaint. Neither have they persuasively articulated why the purported TILA violation does not 14 arise from the same nucleus of fact as the (nearly identical) state court complaint, nor why the 15 Court should deem the Alameda Superior Court Judgment to be anything other than a final 16 judgment against the Patels and in favor of the defendants named there—who are the same parties 17 named as defendants in this action. The Patels’ argument that the earlier judgment is not a final 18 judgment on the merits solely because Defendant Quality Loan Services was not among the parties 19 whose demurrer was sustained borders on the frivolous. Plaintiffs supply no authority for the 20 proposition that a final judgment that disposes of Plaintiffs’ entire case, entered after a sustained 21 demurrer, is a final judgment only as to the demurring defendants but not to others. Further, the 22 Proposed Amended Complaint alleges that Quality was “in privity” with the other defendants. 23 (PAC ¶ 30.) Res judicata applies not only to defendants in earlier actions, but to parties in privity 24 with them. E.g., Tritz v. U.S. Postal Serv., 721 F.3d 1133, 1141 (9th Cir. 2013). Taking Plaintiffs’ 25 26 27 28 2 Because res judicata supplies sufficient grounds for resolving Plaintiff’s Motion, the Court need not reach the issue of tolling nor address Plaintiffs’ failure to comply with the Court’s instruction to remove from the Proposed Amended Complaint their previously rejected securitization arguments (compare Dkt. No. 1 ¶¶ 15-21 with PAC ¶¶ 15-21(repeating previous allegations, apparently word for word)) or Plaintiffs’ counsel’s reprisal of those arguments in the Motion (see Motion at 3, 6-7). 3 1 alleg gation as tru the fact th Quality did not itself demur wou be immat ue, hat d f uld terial, since i was in it 2 priv with the parties that did demur and whose de vity emurrer the s state court su ustained. 3 III. 4 LUSION CONCL For the reasons set forth above, the Court ho that the TILA claim set forth in the r fo t olds m 5 Prop posed Amen nded Compla is barred by res judic aint d cata. Plainti iffs’ sole cla being ba aim arred, 6 ame endment wou be futile. According the Cour DENIES Pl uld . gly, rt laintiffs’ Mo otion for Lea to File an ave n 7 Ame ended Comp plaint. This case is hereb DISMISSE WITH PRE by ED EJUDICE. 8 This Ord terminate Docket No. 34 and ad der es N dministrative terminate Case No. 13-cv-1625. ely es . 9 IT IS SO ORDERED. 10 United States District Court Northern District of California 11 12 Date November 5, 2013 e: r ____ ___________ __________ ___________ ________ YVONN GONZAL ROGERS NE LEZ S UNITED STA ATES DISTRIC COURT JUDGE CT 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 4

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