Sharp v. Nationstar Mortgage LLC et al

Filing 37

ORDER by Judge Lucy H. Koh granting 21 Motion to Dismiss without leave to amend (lhklc3S, COURT STAFF) (Filed on 1/7/2015)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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United States District Court
For the Northern District of California

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SAN JOSE DIVISION

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)
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Plaintiffs,
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v.
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NATIONSTAR MORTGAGE, LLC, an
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unknown business entity; AURORA
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COMMERCIAL CORP., an unknown business )
entity; and DOES 1 through 25, inclusive,
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Defendants.
)
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TODD SHARP and MARIA SHARP,
individuals,

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Case No.: 14-CV-00831-LHK
ORDER GRANTING DEFENDANTS’
MOTION TO DISMISS WITHOUT
LEAVE TO AMEND

Plaintiffs Todd Sharp and Maria Sharp (“Plaintiffs”) allege that Defendants Nationstar

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Mortgage, LLC (“Nationstar”) and Aurora Commercial Corp. (“Aurora”) (collectively,

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“Defendants”) engaged in predatory lending practices to Plaintiffs’ detriment. Before the Court is

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Defendants’ Motion to Dismiss. ECF No. 21 (“Mot.”). Having considered the submissions of the

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parties, the relevant law, and the record in this case, the Court GRANTS Defendants’ Motion to

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Dismiss without leave to amend.

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I.

BACKGROUND

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A.

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On or around September 27, 2006, Plaintiffs took out a $997,500.00 loan from Blue Adobe

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Factual Background

Financial Services, Inc. secured by a deed of trust against real property located at 25011 Hidden
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Case No.: 14-CV-00831-LHK
ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS WITHOUT LEAVE TO AMEND

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Mesa Court, Monterey, California 93940 (the “Property”). ECF No. 18, Third Amended

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Complaint (“TAC”) ¶¶ 1, 13-14.

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1.

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Foreclosure Timeline

Due to Plaintiffs’ failure to stay current on the loan, Cal-Western Reconveyance recorded a

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notice of default on June 17, 2009. TAC ¶¶ 18-19. On November 15, 2010, the deed of trust was

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assigned to Aurora. ECF No. 22-5. After Plaintiffs failed to cure the delinquency, a notice of

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trustee’s sale was recorded on December 15, 2010, setting a sale date of January 4, 2011. ECF No.

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22-4. The sale did not proceed, however, and on June 28, 2012, Aurora assigned the deed of trust

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to Nationstar. ECF No. 22-6; TAC ¶ 38.

United States District Court
For the Northern District of California

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A second notice of trustee’s sale was recorded on December 18, 2012, setting a sale date of

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January 15, 2013. ECF No. 22-7. The Property was eventually sold at public auction on March 5,

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2013, at which time it reverted to Nationstar. ECF No. 22-8.

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After purchasing the Property, Nationstar filed an unlawful detainer action against Plaintiffs

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in Monterey County Superior Court on March 28, 2013. ECF No. 22-9; TAC ¶ 42. On July 2,

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2013, the state court entered judgment against Plaintiffs and in favor of Nationstar, and issued a

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writ of possession. ECF No. 22-10; ECF No. 22-11.

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2.

Plaintiffs’ Allegations

Plaintiffs allege that sometime prior to February 2009 Plaintiffs contacted Aurora and

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requested an alternative to foreclosure. TAC ¶¶ 24. On February 17, 2009, following a series of

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“workout agreements” written on Aurora letterhead, Plaintiffs began making payments to Aurora

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to avoid foreclosure and to help Plaintiffs earn the right to refinance. Id. ¶¶ 26-27. Plaintiffs allege

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that these written agreements were intended as foreclosure prevention alternatives. Id. ¶ 31.

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Plaintiffs allege further that in return for these payments, Aurora promised to modify Plaintiffs’

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loan. Id. ¶ 32.

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On November 24, 2010, Aurora returned Plaintiffs’ most recent payment, notifying

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Plaintiffs that their payment did not make the loan current, that Plaintiffs had no arrangement with

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Aurora to bring the loan current, and that the loan would be referred to foreclosure as a result.

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TAC ¶ 33.
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Case No.: 14-CV-00831-LHK
ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS WITHOUT LEAVE TO AMEND

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On this basis, Plaintiffs assert six causes of action against Defendants: (1) intentional

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misrepresentation; (2) negligent misrepresentation; (3) breach of contract; (4) breach of the implied

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covenant of good faith and fair dealing; (5) promissory estoppel; and (6) negligence. TAC ¶¶ 59-

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75, 91-121. Plaintiffs bring two additional causes of action against Aurora only concerning the

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foreclosure postponement payments: (1) conversion; and (2) embezzlement. Id. ¶¶ 76-90.

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3.

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Plaintiffs’ Bankruptcy Petitions

Plaintiffs have collectively submitted four bankruptcy petitions and received a series of

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automatic stays from any act to obtain possession of property of the estate until the time of

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dismissal or discharge of the bankruptcy proceedings. See, e.g., ECF No. 22-25 at 7 (noting that

United States District Court
For the Northern District of California

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the court lifted the automatic stay in Todd Sharp’s bankruptcy proceeding on December 18, 2013).

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On July 24, 2013, a bankruptcy petition was filed on behalf of Todd Sharp in the Northern

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District of California. ECF No. 22-12. According to Plaintiffs, this “inadequate and incomplete”

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petition was filed by Gregory Lowe (“Lowe”), an attorney with Capital Law. TAC ¶¶ 50-51.

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Plaintiffs allege that a company known as “Help U Stay” filed three additional

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bankruptcies, all in the Central District of California, on behalf of Maria Sharp. TAC ¶¶ 52-53.

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The first petition was filed on July 23, 2013, ECF No. 22-15; the second on October 7, 2013, ECF

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No. 22-18; and the third on February 3, 2014, ECF No. 22-21.

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None of the four bankruptcy petitions disclosed Plaintiffs’ claims against Nationstar and

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Aurora. See ECF No. 22-12 at 12 (Todd Sharp listing no “counterclaims of the debtor”); ECF No.

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22-15 at 16 (Maria Sharp listing no “counterclaims of the debtor”); ECF No. 22-18 at 16 (same);

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ECF No. 22-21 at 14 (same). All four bankruptcies were ultimately dismissed for Plaintiffs’ failure

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to appear or to file required documents. See ECF No. 22-14; ECF No. 22-17; ECF No. 22-20; ECF

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No. 22-23. After her third bankruptcy petition was dismissed on March 20, 2014, Maria Sharp was

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“prohibited from filing any new bankruptcy petition within 180 days of th[at] date.” ECF No. 22-

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23 at 2.

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B.

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On January 6, 2014, Plaintiffs filed their original complaint in Monterey County Superior

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Procedural History

Court. ECF No. 1. On January 22, 2014, Plaintiffs filed a First Amended Complaint (“FAC”). Id.
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ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS WITHOUT LEAVE TO AMEND

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On February 25, 2014, Defendants removed the case to this Court. Id. Defendants moved to

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dismiss Plaintiffs’ FAC on March 4, 2014. ECF No. 5. Rather than respond to Defendants’

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motion, Plaintiffs filed a Second Amended Complaint (“SAC”) on March 28, 2014, ECF No. 8,

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which mooted Defendants’ motion, see ECF No. 16 at 3 n.1.

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On April 8, 2014, Defendants moved to dismiss Plaintiffs’ SAC. ECF No. 11. Plaintiffs

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opposed the motion on April 22, 2014, ECF No. 12, and Defendants replied on April 29, 2014,

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ECF No. 13. On September 3, 2014, the Court granted Defendants’ motion, concluding that

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Plaintiffs were “judicially estopped from pursuing their claims in this case” because “none of

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[Plaintiffs’] four bankruptcy petitions, all of which were filed after March 2013, disclosed any

United States District Court
For the Northern District of California

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claims against Nationstar or Aurora.” ECF No. 16 at 8-9. Although the Court was “doubtful that

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[Plaintiffs] will be able to plead facts sufficient to avoid the application of judicial estoppel in an

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amended pleading,” the Court granted leave to amend in case Plaintiffs could “plead facts to

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establish that the failure to disclose claims against Defendants in [Plaintiffs’] bankruptcy petitions

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resulted from inadvertence or mistake.” Id. at 11.

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Plaintiffs filed their TAC on September 24, 2014, and Defendants filed the instant Motion

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to Dismiss on October 17, 2014. In connection with this motion, Defendants have also filed a

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request for judicial notice. ECF No. 22. Plaintiffs filed their Opposition to the instant motion on

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October 31, 2014. ECF No. 24 (“Opp.”). Defendants filed their Reply on November 7, 2014.

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ECF No. 25.

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II.

LEGAL STANDARDS

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A.

Motion to Dismiss

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Rule 8(a)(2) of the Federal Rules of Civil Procedure requires a complaint to include “a

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short and plain statement of the claim showing that the pleader is entitled to relief.” A complaint

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that fails to meet this standard may be dismissed pursuant to Rule 12(b)(6). The Supreme Court

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has held that Rule 8(a) requires a plaintiff to plead “enough facts to state a claim to relief that is

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plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A claim has facial

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plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable

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inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662,
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678 (2009). “The plausibility standard is not akin to a probability requirement, but it asks for more

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than a sheer possibility that a defendant has acted unlawfully.” Id. (internal quotation marks

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omitted). For purposes of ruling on a Rule 12(b)(6) motion, the Court “accept[s] factual

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allegations in the complaint as true and construe[s] the pleadings in the light most favorable to the

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nonmoving party.” Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir.

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2008).

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The Court, however, need not accept as true allegations contradicted by judicially

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noticeable facts, see Shwarz v. United States, 234 F.3d 428, 435 (9th Cir. 2000), and it “may look

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beyond the plaintiff’s complaint to matters of public record” without converting the Rule 12(b)(6)

United States District Court
For the Northern District of California

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motion into a motion for summary judgment, Shaw v. Hahn, 56 F.3d 1128, 1129 n.1 (9th Cir.

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1995). Nor must the Court “assume the truth of legal conclusions merely because they are cast in

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the form of factual allegations.” Fayer v. Vaughn, 649 F.3d 1061, 1064 (9th Cir. 2011) (per

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curiam) (internal quotation marks omitted). Mere “conclusory allegations of law and unwarranted

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inferences are insufficient to defeat a motion to dismiss.” Adams v. Johnson, 355 F.3d 1179, 1183

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(9th Cir. 2004).

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B.

Request for Judicial Notice

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The Court generally may not look beyond the four corners of a complaint in ruling on a

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Rule 12(b)(6) motion, with the exception of documents incorporated into the complaint by

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reference, and any relevant matters subject to judicial notice. See Swartz v. KPMG LLP, 476 F.3d

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756, 763 (9th Cir. 2007); Lee v. City of L.A., 250 F.3d 668, 688-89 (9th Cir. 2001). Under the

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doctrine of incorporation by reference, the Court may consider on a Rule 12(b)(6) motion not only

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documents attached to the complaint, but also documents whose contents are alleged therein,

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provided the complaint “necessarily relies” on the documents or contents thereof, and the

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documents’ authenticity and relevance are uncontested. Coto Settlement v. Eisenberg, 593 F.3d

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1031, 1038 (9th Cir. 2010); accord Lee, 250 F.3d at 688-89. The purpose of this rule is to “prevent

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plaintiffs from surviving a Rule 12(b)(6) motion by deliberately omitting documents upon which

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their claims are based.” Swartz, 476 F.3d at 763 (alterations and internal quotation marks omitted).

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Case No.: 14-CV-00831-LHK
ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS WITHOUT LEAVE TO AMEND

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The Court also may take judicial notice of matters that are either (1) generally known

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within the trial court’s territorial jurisdiction or (2) capable of accurate and ready determination by

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resort to sources whose accuracy cannot reasonably be questioned. Fed. R. Evid. 201(b). Proper

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subjects of judicial notice when ruling on a motion to dismiss include legislative history reports,

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see Anderson v. Holder, 673 F.3d 1089, 1094 n.1 (9th Cir. 2012); court documents already in the

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public record and documents filed in other courts, see Holder v. Holder, 305 F.3d 854, 866 (9th

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Cir. 2002); and publicly accessible websites, see Daniels-Hall v. Nat’l Educ. Ass’n, 629 F.3d 992,

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998-99 (9th Cir. 2010).

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C.

Leave to Amend

United States District Court
For the Northern District of California

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If the Court determines that the complaint should be dismissed, it must then decide whether

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to grant leave to amend. Under Rule 15(a) of the Federal Rules of Civil Procedure, leave to amend

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“shall be freely given when justice so requires,” bearing in mind “the underlying purpose of Rule

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15 to facilitate decisions on the merits, rather than on the pleadings or technicalities.” Lopez v.

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Smith, 203 F.3d 1122, 1127 (9th Cir. 2000) (en banc) (alterations and internal quotation marks

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omitted). When dismissing a complaint for failure to state a claim, “a district court should grant

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leave to amend even if no request to amend the pleading was made, unless it determines that the

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pleading could not possibly be cured by the allegation of other facts.” Id. at 1130 (internal

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quotation marks omitted). Accordingly, leave to amend generally shall be denied only if allowing

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amendment would unduly prejudice the opposing party, cause undue delay, or be futile, or if the

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moving party has acted in bad faith. Leadsinger, Inc. v. BMG Music Publ’g, 512 F.3d 522, 532

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(9th Cir. 2008).

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III.

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DISCUSSION
Defendants make a series of arguments in support of their Motion to Dismiss. First,

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Defendants argue that the doctrine of collateral estoppel bars Plaintiffs’ claims because the state

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court unlawful detainer judgment secured against Plaintiffs conclusively negates the claims

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asserted in the TAC, that judgment was final, and Plaintiffs were parties to the unlawful detainer

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action. Mot. at 5-7. Second, Defendants contend that Plaintiffs are judicially estopped from

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pursuing their claims. Id. at 7-9. Specifically, Defendants assert that Plaintiffs failed to disclose
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Case No.: 14-CV-00831-LHK
ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS WITHOUT LEAVE TO AMEND

1

any causes of action against Nationstar and Aurora on their bankruptcy petitions, and thus are

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estopped from pursuing the instant litigation. Id. Lastly, Defendants variously argue that

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Plaintiffs’ claims are time-barred, insufficiently pleaded, or otherwise fail as a matter of law. Id. at

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9-16.

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For the reasons explained below, the Court concludes that Plaintiffs are judicially estopped

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from pursuing this action. Accordingly, the Court need not reach Defendants’ remaining

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arguments in favor of dismissal.

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A.

Judicial Notice

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“Even if a document is not attached to a complaint, it may be incorporated by reference into

United States District Court
For the Northern District of California

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a complaint if the plaintiff refers extensively to the document or the document forms the basis of

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the plaintiff’s claim.” United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003). “The defendant

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may offer such a document, and the district court may treat such a document as part of the

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complaint, and thus may assume that its contents are true for purposes of a motion to dismiss under

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Rule 12(b)(6).” Id.

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Here, several of Plaintiffs’ claims for relief depend upon information contained in their

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deeds of trust, the substitutions of trustee, the notice of default, the trustee’s deeds upon sale, and

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Plaintiffs’ four bankruptcy petitions. Moreover, the documents relating to Plaintiffs’ bankruptcy

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proceedings and orders entered in state court are judicially noticeable because they are matters of

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public record. See Holder, 305 F.3d at 866. Accordingly, the Court GRANTS Defendants’ request

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for judicial notice. See Hayes v. Wells Fargo Bank, N.A., No. 3:13-CV-0420 KAW, 2013 WL

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4117050, at *3-4 (N.D. Cal. Aug. 12, 2013) (taking judicial notice of similar documents).

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B.

Judicial Estoppel

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Judicial estoppel is an equitable doctrine, invoked by a court at its discretion, which

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precludes a party from gaining an advantage by asserting one position and subsequently taking a

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clearly inconsistent position. See Hamilton v. State Farm Fire & Cas. Co., 270 F.3d 778, 782 (9th

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Cir. 2001). The doctrine applies to prevent a party from asserting inconsistent positions in

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different cases, as well as in a single litigation. Id. at 783. The Supreme Court has identified three

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factors that courts may consider in determining whether to apply the doctrine of judicial estoppel:
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(1) whether a party’s position is “clearly inconsistent” with its earlier position; (2) whether the first

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court accepted the party’s earlier position; and (3) whether the party seeking to assert an

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inconsistent position would derive an unfair advantage if not estopped. New Hampshire v. Maine,

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532 U.S. 742, 750-51 (2001). “In addition to these factors, the Ninth Circuit examines whether the

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party to be estopped acted inadvertently or with any degree of intent.” Milton H. Greene Archives,

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Inc. v. CMG Worldwide, Inc., 568 F. Supp. 2d 1152, 1164 (C.D. Cal. 2008) (internal quotation

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marks omitted). “If incompatible positions are based not on chicanery, but only on inadvertence or

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mistake, judicial estoppel does not apply.” Johnson v. Or. Dep’t of Human Res., 141 F.3d 1361,

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1369 (9th Cir. 1998).

United States District Court
For the Northern District of California

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“In the bankruptcy context, the federal courts have developed a basic default rule: If a

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plaintiff-debtor omits a pending (or soon-to-be-filed) lawsuit from the bankruptcy schedules and

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obtains a discharge (or plan confirmation), judicial estoppel bars the action.” Ah Quin v. Cnty. of

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Kauai Dep’t of Transp., 733 F.3d 267, 271 (9th Cir. 2013). The application of judicial estoppel in

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the bankruptcy setting is important “to protect the integrity of the bankruptcy process,” for “[t]he

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debtor, once he institutes the bankruptcy process, disrupts the flow of commerce and obtains a stay

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and the benefits derived by listing all his assets.” Hamilton, 270 F.3d at 785 (emphasis added).

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Further, because the Bankruptcy Code subjects debtors to a continuing duty to disclose all pending

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and potential claims, see 11 U.S.C. § 521(a)(1), judicial estoppel bars a plaintiff from pursuing a

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claim that the plaintiff failed to disclose in his bankruptcy proceeding even when the claim arose

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after the bankruptcy petition was initially filed, see Hamilton, 270 F.3d at 785. Indeed, “[j]udicial

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estoppel will be imposed when the debtor has knowledge of enough facts to know that a potential

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cause of action exists during the pendency of the bankruptcy, but fails to amend his schedules or

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disclosure statements to identify the cause of action as a contingent asset.” Id. at 784; see also Ah

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Quin, 733 F.3d at 272-73 (applying “a presumption of deliberate manipulation” where “a plaintiff-

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debtor has not reopened bankruptcy proceedings” and “filed amended bankruptcy schedules that

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properly listed this claim as an asset”).

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In this case, the facts and events upon which Plaintiffs base their claims occurred between

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February 17, 2009, when Plaintiffs began to make foreclosure postponement payments to Aurora,
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Case No.: 14-CV-00831-LHK
ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS WITHOUT LEAVE TO AMEND

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and March 28, 2013, when Nationstar filed an unlawful detainer action in state court to obtain

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ownership of the property. TAC ¶¶ 24-42. Thus, Plaintiffs had “knowledge of enough facts to

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know [of] a potential cause of action” against Defendants by the end of March 2013 at the latest.

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Hamilton, 270 F.3d at 784.

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Despite being on notice of the existence of facts that purportedly support a cause of action
against Defendants, none of Plaintiffs’ four bankruptcy petitions, all of which were filed after

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March 2013, disclosed any claims against Nationstar or Aurora. See ECF No. 22-12 at 12; ECF

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No. 22-15 at 16; ECF No. 22-18 at 16; ECF No. 22-21 at 14. In fact, Maria Sharp’s third

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bankruptcy petition was filed after the initiation of this lawsuit.1 Compare ECF No. 1 at 2 (noting

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United States District Court
For the Northern District of California

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that Plaintiffs filed their original complaint on January 6, 2014), with ECF No. 22-21 at 2 (noting

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that Maria Sharp filed her third bankruptcy petition on February 3, 2014).

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Weighing the factors that govern the application of judicial estoppel, the Court finds once

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again that Plaintiffs are judicially estopped from pursuing their claims in this case. First, by failing

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to list claims against Aurora and Nationstar in their bankruptcy petitions, Plaintiffs have asserted

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“clearly inconsistent” positions across cases. See Hamilton, 270 F.3d at 784 (“[Plaintiff] clearly

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asserted inconsistent positions. He failed to list his claims against [defendant] as assets on his

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bankruptcy schedules, and then later sued [defendant] on the same claims.”). Plaintiffs concede as

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much. See Opp. at 8 (“The inconsistency here is that in Todd Sharp’s bankruptcy he did not

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disclose the misconduct of Aurora or Nationstar. The subsequent bankruptcies . . . also failed to

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mention these claims.”).

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Second, the bankruptcy courts “accepted” Plaintiffs’ position and granted them the benefit

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of four automatic stays pursuant to 11 U.S.C. § 362. See Hamilton, 270 F.3d at 784-85 (“Our

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holding does not imply that the bankruptcy court must actually discharge debts before the judicial

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acceptance prong may be satisfied. The bankruptcy court may ‘accept’ the debtor’s assertions by

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relying on the debtor’s nondisclosure of potential claims in many other ways. . . . [Plaintiff] did

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Plaintiffs received the benefit of an automatic stay pursuant to 11 U.S.C. § 362 upon filing
each of their petitions. Each petition was subsequently dismissed. See ECF No. 22-14; ECF No.
22-17; ECF No. 22-20; ECF No. 22-23.
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ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS WITHOUT LEAVE TO AMEND

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enjoy the benefit of [] an automatic stay . . . .”); see also Swendsen v. Ocwen Loan Servicing, LLC,

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No. 13-2082, 2014 WL 1155794, at *5-6 (E.D. Cal. Mar. 21, 2014) (automatic bankruptcy stay is

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sufficient to meet judicial acceptance prong); HPG Corp. v. Aurora Loan Servs., LLC, 436 B.R.

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569, 578 (E.D. Cal 2010) (same). Plaintiffs do not disagree. See Opp. at 8.

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Lastly, as to unfair advantage, Plaintiffs’ repeated failure to disclose their claims against

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defendants deceived the bankruptcy court and thus undermined the integrity of the bankruptcy

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process. See Hamilton, 270 F.3d at 784-85; see also Swendsen, 2014 WL 1155794, at *6 (“The

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law in this area is clear: a plaintiff who has received the benefit of an automatic stay under 11

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U.S.C. § 362(a) would receive an unfair advantage by prosecuting claims against a defendant after

United States District Court
For the Northern District of California

10
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failing to disclose those claims in his bankruptcy proceedings.”).
In response, Plaintiffs advance a variant of the “inadvertence or mistake” defense to judicial

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estoppel: they attempt to shift the blame to other parties. See Ah Quin, 733 F.3d at 271-78. “[I]t

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was not,” Plaintiffs argue “the chicanery, misrepresentation, mistake or inadvertence of the

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Plaintiffs which resulted in the claims being absent from their bankruptcy schedules.” Opp. at 9

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(emphasis added). “Rather, it was the fault of Gregory Lowe and later Help U Stay,” Plaintiffs

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contend. Id. With respect to Todd Sharp’s bankruptcy filing of July 24, 2013, Plaintiffs allege that

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Lowe, an attorney with Capital Law, filed an “inadequate and incomplete” petition on Todd

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Sharp’s behalf. TAC ¶ 50. As evidence of counsel’s malpractice, Plaintiffs allege further that

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“Lowe was ordered by the Northern District Bankruptcy Court on December 6, 2013 to return

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funds to the[m].” Id. ¶ 51; see also ECF No. 18-2 at 49. With respect to the three additional

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“incomplete” bankruptcy petitions naming Maria Sharp but supposedly filed by Help U Stay,

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including the one filed after this lawsuit began, Plaintiffs claim that they “were not informed of

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these ban[k]ruptcies.” TAC ¶ 53.

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The Court is not convinced. To begin, the Court notes that in Plaintiffs’ opposition to

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Defendants’ initial motion to dismiss, Plaintiffs claimed that their repeated failure to disclose their

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claims against Defendants was an “unintentional mistake[]” resulting from “not having adequate

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representation.” ECF No. 12 at 6. Plaintiffs, thus, have changed their tune. In addition, the

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judicially noticeable record indicates that Plaintiffs have engaged in a pattern of filing skeletal
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ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS WITHOUT LEAVE TO AMEND

1

bankruptcies (or having others file such bankruptcies on their behalf), obtaining an automatic stay,

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and then failing to appear at the scheduled meeting of creditors or failing to file required

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documents. See ECF No. 22-14; ECF No. 22-17; ECF No. 22-20; ECF No. 22-23. In fact, after

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her third bankruptcy petition was dismissed on March 20, 2014, Maria Sharp was “prohibited from

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filing any new bankruptcy petition within 180 days of th[at] date.” ECF No. 22-23 at 2. Plaintiffs’

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allegation that a third party was filing rogue petitions naming Maria Sharp is simply not credible.

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Importantly, Plaintiffs do not allege that they ever corrected any of the four bankruptcy filings to

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include their claims against Defendants. See Ah Quin, 733 F.3d at 272 (“A key factor is that

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Plaintiff reopened her bankruptcy proceedings and filed amended bankruptcy schedules that

United States District Court
For the Northern District of California

10

properly listed this claim as an asset.”). As a result, the Court applies “a presumption of deliberate

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manipulation” that Plaintiffs, for the reasons stated, have not overcome. Id. at 273.

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Plaintiffs’ citations to Just Film, Inc. v. Merchant Services, Inc., 873 F. Supp. 2d 1171

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(N.D. Cal. 2012), and Gaudin v. Saxon Mortgage Services, Inc., 820 F. Supp. 2d 1051 (N.D. Cal.

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2011), are unavailing. In Just Film, the court declined to apply judicial estoppel because the

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plaintiff-debtor had “told his bankruptcy attorney about this case during the original bankruptcy

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proceedings,” but the attorney had “failed to include it in the schedule.” 873 F. Supp. 2d at 1179.

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Moreover, the “undisputed evidence” in Just Film established that the plaintiff-debtor had “directly

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told the trustee about this case at the initial creditors’ meeting” and had “re-opened the case and

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remedied his error.” Id. Here, by contrast, at least two of Plaintiffs’ bankruptcy petitions were

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dismissed for failure to appear at the creditors’ meetings, see ECF No. 22-17; ECF No. 22-20, and

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Plaintiffs never corrected any of their disclosures. Gaudin, on the other hand, does not even

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concern the defense of inadvertence or mistake. There, the court found that the defendant had not

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“shown how any position Gaudin took in the bankruptcy action is inconsistent with her position

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here.” Gaudin, 820 F. Supp. 2d at 1053. Here, of course, Plaintiffs concede that they have taken

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inconsistent positions in their bankruptcy filings. See Opp. at 8. Gaudin is therefore inapposite.

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The Court therefore finds that Plaintiffs have failed to allege facts plausibly suggesting that

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their repeated failure to disclose claims against Nationstar and Aurora in Plaintiffs’ bankruptcy

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petitions was the result of inadvertence or mistake. Having weighed the relevant factors, the Court
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ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS WITHOUT LEAVE TO AMEND

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concludes in its discretion that Plaintiffs are judicially estopped from pursuing their claims in the

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instant lawsuit.

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IV.

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CONCLUSION
For the foregoing reasons, the Court GRANTS Defendants’ Motion to Dismiss. Plaintiffs

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have had an opportunity to cure the deficiencies identified in the Court’s prior order dismissing

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Plaintiffs’ claims on judicial estoppel grounds, and they have failed to do so. Accordingly, the

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Court finds that further amendment would be futile and will not grant leave to amend. See Mujica

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v. AirScan Inc., 771 F.3d 580, 593 & n.8 (9th Cir. 2014).

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United States District Court
For the Northern District of California

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The Clerk shall close the case file.
IT IS SO ORDERED.

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Dated: January 7, 2015

_________________________________
LUCY H. KOH
United States District Judge

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Case No.: 14-CV-00831-LHK
ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS WITHOUT LEAVE TO AMEND