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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UNITED STATES DI
D
ISTRICT COU
URT

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NORTHER DISTRICT OF CALIFO
RN
T
ORNIA

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United States District Court
Northern District of California

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CHE
ETANN PATE AND HAR
EL
RSHIKA PATE ,
EL
Plaintiff,

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v.

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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.

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C
Case No.: 13
3-CV-1625 Y
YGR

I.

INTROD
DUCTION

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Plaintiff Chetann Patel and Har
fs
rshika Patel b
bring this ac
ction challen
nging the pen
nding

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fore
eclosure of th home, naming as de
heir
n
efendants U.S Bank, N.A As Trustee For Citig
S.
A.,
group

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Mor
rtgage Loan Trust, Inc., Asset-Backe Pass-Thro
ed
ough Certific
cates, Series 2006-HE1; Wells
s
;

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Farg Bank, N.A Mortgage Electronic Registration Systems, I
go
A.;
c
n
Inc., and Quality Loan S
Service Corp.

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Plaintiffs’ initial complaint, filed April 10, 2013, as serted eight causes of ac
ction against these
t

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defe
endants.1 Tw defendan groups file motions t dismiss an on June 14, 2013, the Court
wo
nt
ed
to
nd,
e

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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

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Pate had previ
els
iously filed a complaint in Alameda County Sup
i
perior Court “against all the

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defe
endants here based upon the same se of facts an the same b
et
nd
basic theorie as alleged herein,” and
es
d

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that the state cou had dism
urt
missed that ca with prej
ase
judice in Sep
ptember 201
12. (Id. at 2; see also

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1

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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)
).)

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Dkt. No. 15-15 (Judgment entered again Patels by Alameda C
e
nst
y
County Super Court).) The Court
rior

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ackn
entirely barr by res
nowledged th the Patel had conce
hat
ls
eded that thei initial com
ir
mplaint was e
red

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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

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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

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claim based on the “securitization argum
m
t
ments” raised in both the initial federal complain and the
d
e
nt

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dism
missed state court action were barred by res judic
c
d
cata. (Id. at 4.) The Cou also warn that
urt
ned

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Plaintiffs bore th burden of establishing why the on
he
f
g
ne-year statu of limitat
ute
tion for TILA claims
A

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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

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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

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United States District Court
Northern District of California

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an exhibit to the motion. Th allegation and the m
e
e
he
ns
motion must a
address clear and speci
rly
ifically why

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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

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and lodged the amended ple
a
eading they seek to file. (Dkt. No. 34 (“Motion” Dkt. No. 36
s
”),

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(Pro
oposed Amen
nded Compl
laint (“PAC”
”)).) The Mo
otion is fully briefed (Dk Nos. 45 (“
y
kt
“Opp’n”), 46
6

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(“Re
eply”)), and the Court to oral argu
ook
ument on Au
ugust 27, 201 (Dkt. No. 51). For th reasons
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.
he

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set forth below, the Motion is DENIED.
f

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II.

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DISCUS
SSION
Federal Rule of Civi Procedure 15 requires that a plaint obtain either consent of the
R
il
tiff
t

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defe
endant or lea of court to amend its complaint o
ave
t
s
once the defe
fendant has a
answered, bu “leave
ut

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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.

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Co., 292 F.3d 99 1003 (9th Cir. 2002) (leave to am
,
92,
)
mend granted with “extr
reme liberalit
ty”). One

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exce
eption to this general rul of liberalit however, is where am
s
le
ty,
,
mendment w
would be futile. Foman

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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

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Cir. 2004). Thu a district court does not err in refu
us,
n
using to gran leave to am
nt
mend after “
“reasonably

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clud[ing] tha further am
at
mendment wo
ould be futil e.” Sylvia L
Landfield Tru v. City of Los
ust
f
conc

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Ang
geles, --- F.3d ---, 2013 WL 4779664 (9th Cir. Se 9, 2013)
d
W
4
ept.
).

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2

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Here, the Court concludes that permitting Plaintiffs to file their Proposed Amended

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Complaint would be futile because the TILA claim set forth therein is barred by res judicata.2 As

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the Court explained in its June 14 Order, res judicata bars relitigation of claims where there is (1)

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identity of claims, (2) identity of parties, and (3) a final judgment on the merits. Res judicata bars

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not only claims that actually were previously litigated, but also claims that could have been

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previously litigated, arising out of the “same transactional nucleus of fact.” Further, “[p]ursuing

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new legal theories does not create a new cause of action sufficient to avoid res judicata.” June 14

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Order at 2-3 (citations omitted).
Res judicata bars the Patels’ TILA claim because it could have been asserted against the

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same parties in the earlier state court litigation. In view of the fact that TILA claims arise from a

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United States District Court
Northern District of California

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failure to provide disclosures at the time a loan closes, the Patels have articulated no persuasive

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reason why any TILA violation could not have been discovered prior to filing of the state court

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complaint. Neither have they persuasively articulated why the purported TILA violation does not

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arise from the same nucleus of fact as the (nearly identical) state court complaint, nor why the

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Court should deem the Alameda Superior Court Judgment to be anything other than a final

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judgment against the Patels and in favor of the defendants named there—who are the same parties

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named as defendants in this action. The Patels’ argument that the earlier judgment is not a final

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judgment on the merits solely because Defendant Quality Loan Services was not among the parties

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whose demurrer was sustained borders on the frivolous. Plaintiffs supply no authority for the

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proposition that a final judgment that disposes of Plaintiffs’ entire case, entered after a sustained

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demurrer, is a final judgment only as to the demurring defendants but not to others. Further, the

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Proposed Amended Complaint alleges that Quality was “in privity” with the other defendants.

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(PAC ¶ 30.) Res judicata applies not only to defendants in earlier actions, but to parties in privity

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with them. E.g., Tritz v. U.S. Postal Serv., 721 F.3d 1133, 1141 (9th Cir. 2013). Taking Plaintiffs’

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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).
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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

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priv with the parties that did demur and whose de
vity
emurrer the s
state court su
ustained.

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III.

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LUSION
CONCL
For the reasons set forth above, the Court ho that the TILA claim set forth in the
r
fo
t
olds
m

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Prop
posed Amen
nded Compla is barred by res judic
aint
d
cata. Plainti
iffs’ sole cla being ba
aim
arred,

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ame
endment wou be futile. According the Cour DENIES Pl
uld
.
gly,
rt
laintiffs’ Mo
otion for Lea to File an
ave
n

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Ame
ended Comp
plaint. This case is hereb DISMISSE WITH PRE
by
ED
EJUDICE.

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This Ord terminate Docket No. 34 and ad
der
es
N
dministrative terminate Case No. 13-cv-1625.
ely
es
.

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IT IS SO ORDERED.

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United States District Court
Northern District of California

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Date November 5, 2013
e:
r

____
___________
__________
___________
________
YVONN GONZAL ROGERS
NE
LEZ
S
UNITED STA
ATES DISTRIC COURT JUDGE
CT

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