Rivera et al v. Deutsche Bank National Trust Company, as trustee of certificate-holders of the WaMu Mortgage Pass Through Certificate Series 2005-AR6 et al

Filing 44

ORDER ON MOTION TO REMAND; SETTING COMPLIANCE HEARING; VACATING CASE MANAGEMENT CONFERENCE. Denying as moot 10 MOTION to Expunge Lis Pendens filed by Deutsche Bank National Trust Company, JPMorgan Chase Bank, N.A., Denying as moot 9 M OTION to Dismiss Plaintiffs' First Amended Complaint filed by Deutsche Bank National Trust Company, JPMorgan Chase Bank, N.A., Denying as moot 38 MOTION for Leave to File Late Opposition to Defendant MTC Financial's Moti on to Dismiss and Request for Judicial Notice filed by Anton Andrew Rivera, Denise Ann Rivera, 8 MOTION to Dismiss Plaintiffs' First Amended Complaint filed by MTC Financial. Signed by Judge Yvonne Gonzalez Rogers on 5/3/16. (fs, COURT STAFF) (Filed on 5/3/2016)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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ANTON A. RIVERA AND DENISE A. RIVERA,
Plaintiffs,
v.
JPMORGAN CHASE BANK, N.A. et al.,
Defendants.

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Case No. 16-cv-00636 YGR
ORDER ON MOTION TO REMAND; SETTING
COMPLIANCE HEARING; VACATING CASE
MANAGEMENT CONFERENCE
Re: Dkt. No. 15

Plaintiffs Anton Rivera and Denise Rivera filed the instant action in the Superior Court for the

Northern District of California

United States District Court

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State of California, County of Contra Costa, against defendants Deutsche Bank National Trust

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Company, JPMorgan Chase Bank, N.A., and MTC Financial d/b/a Trustee Corps (collectively,

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“defendants”) bringing various causes of action against defendants in connection with the foreclosure

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of plaintiffs’ mortgage. Plaintiffs bring thirteen causes of action under California State law and a

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fourteenth claim against all defendants for civil Racketeer Influenced and Corrupt Organizations Act

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(“RICO”). On February 8, 2016, defendants removed the action based on federal question

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jurisdiction, 28 U.S.C. section 1331, by virtue of the RICO claim. (Dkt. No. 1.)

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Currently pending before the Court is plaintiffs’ motion to remand. (Dkt. No. 15.)1 Plaintiffs

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argue that the Court should decline jurisdiction over the entire case given that the RICO claim is the

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only federal cause of action in the first amended complaint (“FAC”). Defendants do not contest that

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the Court has original jurisdiction over the RICO claim only. With respect to the other thirteen causes

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of action, defendants contend that the Court may exercise supplemental jurisdiction under 28 U.S.C.

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section 1367(a). The Court agrees with the parties that the only ground on which this Court may

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exercise subject matter jurisdiction is its original jurisdiction to adjudicate plaintiffs’ RICO claim.

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Also pending before the Court are defendants’ motions to dismiss (Dkt. Nos. 8, 9) and to
expunge lis pendens (Dkt. No. 10) as well as plaintiffs’ motion for leave to file a late opposition to
defendant MTC’s motion to dismiss (Dkt. No. 38). In light of the Court’s Order today, those motions
(Dkt. Nos. 8, 9, 10, 38) are DENIED AS MOOT to be renewed later if appropriate.

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See 28 U.S.C. § 1331 (“The district courts shall have original jurisdiction over all civil actions under

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the…laws…of the United States”); 28 U.S.C. § 1367(a) (“the district courts shall have supplemental

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jurisdiction over all other claims that are so related to claims in the action with such original

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jurisdiction that they form part of the same case or controversy….”). For the reasons discussed

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below, however, the Court finds that the FAC fails to allege a plausible RICO claim. Accordingly,

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there is not an adequate jurisdictional showing at this juncture.

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RICO, 18 U.S.C. section 1962(c), makes it “unlawful for any person employed by or

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associated with any enterprise . . . to conduct or participate, directly or indirectly, in the conduct of

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such enterprise’s affairs through a pattern of racketeering activity.” 18 U.S.C. § 1962(c). To state a
activity.” Odom v. Microsoft Corp., 486 F.3d 541, 547 (9th Cir. 2007) (en banc) (quoting Sedima,

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Northern District of California

claim, Plaintiffs must allege: “(1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering

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United States District Court

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S.P.R.L. v. Imrex Co., Inc., 473 U.S. 479, 496 (1985)). Section 1962(c) requires plaintiffs to allege

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two distinct entities: a “person” and an “enterprise.” Cedric Kushner Promotions, Ltd. v. King, 533

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U.S. 158, 161, 166 (2001). Section 1962(c) liability “depends on showing that the defendants

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conducted or participated in the conduct of the ‘enterprise’s affairs,’ not just their own affairs.” Id. at

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163 (quoting Reves v. Ernst & Young, 507 U.S. 170, 185 (1993)). An enterprise that is not a legal

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entity, such as a corporation, is commonly known as an “association-in-fact” enterprise. Mitsui

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O.S.K. Lines, Ltd. v. Seamaster Logistics, Inc., 871 F. Supp. 2d 933, 939 n.6 (N.D. Cal. 2012). The

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Ninth Circuit holds “an association-in-fact enterprise is ‘a group of persons associated together for a

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common purpose of engaging in a course of conduct.’” Odom, 486 F.3d at 552 (quoting United States

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v. Turkette, 452 U.S. 576, 583 (1981)); Boyle v. United States, 556 U.S. 939, 944 (2009). To show an

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association-in-fact enterprise, plaintiffs must allege facts to establish three elements: (1) a common

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purpose of engaging in a course of conduct; (2) an ongoing organization, either formal or informal;

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and (3) facts that provide sufficient evidence the associates function as a continuing unit. Odom, 486

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F.3d at 553 (citing Turkette, 452 U.S. at 583).

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Here, plaintiffs allege that defendants engaged in mail fraud with respect to several fraudulent

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acts, namely: the misapplication of mortgage payments; assignment of false instruments; and

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recordation of instruments containing false representations. (FAC ¶¶ 344-348.) Plaintiffs also allege

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that defendants conspired together in doing the same. (Id. ¶¶ 356-357.) The FAC further alleges that

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defendants collectively “are an ‘association-in-fact enterprise’ associated together for the common

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purpose of depriving homeowners of their property.” (FAC ¶ 356.)

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The Court finds that plaintiffs’ allegations in the FAC are insufficient to state a civil RICO

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claim. See Fed.R.Civ.P. 8(a)(2) (a complaint must contain “a short and plain statement of the claim

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showing that the pleader is entitled to relief”); Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555

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(2007) (“a plaintiff’s obligation to provide the grounds of his entitlement to relief requires more than

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labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do”).

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First, the FAC provides insufficient facts to substantiate the common purpose for the association-inthat defendants actually knew of the alleged common purpose, or that they “formed” the enterprise to

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Northern District of California

fact enterprise as alleged therein. Plaintiffs offer no factual allegations to render plausible their claim

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United States District Court

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participate in “depriving homeowners of their property” – much less that defendants “conspired

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together” to effectuate those fraudulent purposes. (FAC ¶¶ 355-57.) Thus, the FAC lacks allegations

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to support plaintiffs’ conclusory assertion that defendants shared the alleged common purpose of the

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enterprise. In addition, the FAC lacks any allegation that defendants engaged in enterprise affairs

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outside of their own business affairs.

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As such, the RICO claim is not pled adequately in the FAC. Given the nature of the

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allegations, the Court is skeptical that plaintiffs can allege a RICO claim. However, out of an

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abundance of caution, plaintiffs are afforded until May 16, 2016 to file either a (i) dismissal the RICO

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claim, or (ii) second amended complaint which includes additional allegations to support a RICO

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claim. Should plaintiffs dismiss their RICO claim, the Court will remand the remainder of the action

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to the Contra Costa Superior Court. See Jones v. Community Redevelopment Agency of City of Los

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Angeles, 733 F.2d 646, 651 (9th Cir. 1984) (where “federal claims are dismissed before

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trial…pendant state claims also should be dismissed”). On the other hand, should plaintiffs file a

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second amended complaint, the Court will determine whether additional briefing on the sufficiency of

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the RICO allegations is necessary and issue a further order thereon. Counsel for plaintiffs is reminded

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of his Rule 11 obligations in filing any second amended complaint.

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The Court SETS a Compliance Hearing regarding plaintiffs’ filing to be held on Friday, May

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20, 2016 at 9:01 a.m. in the Federal Courthouse located at 1301 Clay Street in Oakland, California,

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Courtroom 1. If plaintiffs have timely filed a dismissal of the RICO claim or a second amended

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complaint, the hearing may be taken off calendar and no appearance may be required. Failure to do so

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may result in sanctions to plaintiffs.

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In light of this Order, the Case Management Conference currently set for Monday, May 9,
2016, is hereby VACATED to be reset if necessary.

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This Order terminates Docket Numbers 8, 9, 10, 38.

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IT IS SO ORDERED.

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Northern District of California

United States District Court

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Dated: May 3, 2016
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YVONNE GONZALEZ ROGERS
UNITED STATES DISTRICT COURT JUDGE

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