Natividad et al v. Resmae Mortgage Corporation et al

Filing 21

ORDER granting 11 Motion to Dismiss. Judgment will be entered in favor of Defendants and the Clerk shall close this file. Signed by Judge Edward J. Davila on 9/17/2015. (ejdlc1S, COURT STAFF) (Filed on 9/17/2015)

1
2
3
4

UNITED STATES DISTRICT COURT

5

NORTHERN DISTRICT OF CALIFORNIA

6

SAN JOSE DIVISION

7
FELIPE B. NATIVIDAD, et al.,

8

Case No. 5:15-cv-02359-EJD

Plaintiffs,
9

ORDER GRANTING DEFENDANTS’
MOTION TO DISMISS

v.
10
RESMAE MORTGAGE CORPORATION,
et al.,

United States District Court
Northern District of California

11

Re: Dkt. No. 11

Defendants.

12

The instant action related to real property located in San Jose, California, was initiated by

13
14

Plaintiffs Felipe B. Natividad and Diana O. Natividad (“Plaintiffs”) in Santa Clara County

15

Superior Court on August 25, 2014, against several defendants. Two of them, Defendants U.S.

16

Bank National Association, as Trustee for J.P. Morgan Mortgage Acquisition Trust 2006-HE3,

17

Asset-Backed Pass-Through Certificates, Series 2006-HE3, and Mortgage Electronic Registration

18

Systems, Inc. (“Defendants”) removed the action to this court on May 27, 2015. Presently before

19

the court is Defendants’ Motion to Dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6).

20

See Docket Item No. 11. The motion is unopposed.1

21
22
23
24
25
26
27
28

1

The court issued an order to show cause (“OSC”) requiring Plaintiffs to explain their inaction
after they failed to file an opposition to the Motion to Dismiss and failed to participate in a
telephone conference with the court’s ADR Unit. See Docket Item No. 17. Plaintiffs retained
counsel and filed a return in which they explain that they failed to take further action after filing
the Complaint because an unidentified realtor told them that their bankruptcy action stayed this
case. See Docket Item No. 19. The court has serious doubts about the veracity of Plaintiffs’
explanation given their experience with the bankruptcy system. Also notable is the fact they were
represented by counsel for each of their bankruptcy proceedings, thereby obviating any need to
resort to a realtor’s legal advice. Moreover, Plaintiffs apparently made no inquiry of the status of
this case after receiving documents from both Defendants and the court, even if they actually
believed it was stayed.
1
Case No.: 5:15-cv-02359-EJD
ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS

1

This matter is suitable for decision without oral argument pursuant to Civil Local Rule 7-

2

1(b). Having carefully considered Defendants’ arguments, the court finds, concludes and orders as

3

follows:

4

1.

Federal Rule of Civil Procedure 8(a) requires a plaintiff to plead each claim with

5

sufficient specificity to “give the defendant fair notice of what the . . . claim is and the grounds

6

upon which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal quotations

7

omitted). A complaint that falls short of the Rule 8(a) standard may be dismissed if it fails to state

8

a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). “Dismissal under Rule

9

12(b)(6) is appropriate only where the complaint lacks a cognizable legal theory or sufficient facts

10

United States District Court
Northern District of California

11
12
13
14
15
16
17

to support a cognizable legal theory.” Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097,
1104 (9th Cir. 2008). Moreover, the factual allegations “must be enough to raise a right to relief
above the speculative level” such that the claim “is plausible on its face.” Twombly, 550 U.S. at
556-57. When deciding whether to grant a motion to dismiss, the court generally “may not
consider any material beyond the pleadings.” Hal Roach Studios, Inc. v. Richard Feiner & Co.,
896 F.2d 1542, 1555 n.19 (9th Cir. 1990). However, the court may consider material submitted as
part of the complaint or relied upon in the complaint, and may also consider material subject to
judicial notice. See Lee v. City of Los Angeles, 250 F.3d 668, 688-69 (9th Cir. 2001).
In addition, the court must generally accept as true all “well-pleaded factual allegations.”

18
Ashcroft v. Iqbal, 556 U.S. 662, 664 (2009). The court must also construe the alleged facts in the
19
light most favorable to the plaintiff. Love v. United States, 915 F.2d 1242, 1245 (9th Cir. 1988).
20
21
22
23

However, “courts are not bound to accept as true a legal conclusion couched as a factual
allegation.” Id. Nor must the court assume the truth of “allegations that contradict matters
properly subject to judicial notice or by exhibit” or “allegations that are merely conclusory,
unwarranted deductions of fact, or unreasonable inferences.” In re Gilead Scis. Sec. Litig., 536

24
25
26
27
28

In any event, the court finds that dismissal for lack of prosecution is unwarranted since Plaintiffs
responded to the OSC. Accordingly, the OSC issued on August 26, 2015, is DISCHARGED.
However, the court will not permit Plaintiffs to file what would be a seriously untimely opposition
to the Motion to Dismiss.
2
Case No.: 5:15-cv-02359-EJD
ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS

1
2

F.3d 1049, 1055 (9th Cir. 2008).
2.

“Judicial estoppel is an equitable doctrine that precludes a party from gaining an

3

advantage by asserting one position, and then later seeking an advantage by taking a clearly

4

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

5

2001). Aside from preventing inconsistency, the Ninth Circuit applies this discretionary equitable

6

doctrine out of “‘general considerations of the orderly administration of justice and regard for the

7

dignity of judicial proceedings,’ and to ‘protect against a litigant playing fast and loose with the

8

courts.’” Id. (quoting Russell v. Rolfs, 893 F.2d 1033, 1037 (9th Cir. 1990)).

9
10

United States District Court
Northern District of California

11
12
13
14
15
16
17

3.

While “[c]ourts have observed that ‘the circumstances under which judicial

estoppel may appropriately be invoked are probably not reducible to any general formulation of
principle,’” (New Hampshire v. Maine, 532 U.S. 742, 750 (2001) (quoting Allen v. Zurich Ins.
Co., 667 F.2d 1162, 1166 (4th Cir. 1982)), three non-exhaustive factors are routinely considered:
(1) whether the party’s later position is “clearly inconsistent with its earlier position;” (2) “whether
the party has succeeded in persuading a court to accept that party’s earlier position, so that judicial
acceptance of an inconsistent position in a later proceeding would create the perception that either
the first or the second court was misled;” and (3) “whether the party seeking to assert an
inconsistent position would derive an unfair advantage or impose an unfair detriment on the
opposing party if not estopped.” Hamilton, 270 F.3d at 782-83 (citing New Hampshire, 532 U.S.

18
at 750-51).
19
4.

“The application of judicial estoppel is not limited to bar the assertion of

20
inconsistent positions in the same litigation, but is also appropriate to bar litigants from making
21
22
23
24
25
26
27
28

incompatible statements in two different cases.” Id. at 783. Thus, “[i]n the bankruptcy context, a
party is judicially estopped from asserting a cause of action not raised in a reorganization plan or
otherwise mentioned in the debtor’s schedules or disclosure statements.” Id. This is because
“[t]he debtor, once he institutes the bankruptcy process, disrupts the flow of commerce and obtains
a stay and the benefits derived by listing all his assets.” Id. at 785. Indeed, “[w]here a debtor files
successive petitions and obtains successive stays without full disclosure of all assets, the debtor
derives an unfair advantage if he can later recover on undisclosed claims, and the bankruptcy
3
Case No.: 5:15-cv-02359-EJD
ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS

1

system is laid bare for abuse.” HPG Corp. v. Aurora Loan Servs., 436 B.R. 569, 578 (E.D. Cal.

2

2010).
5.

3

Defendants have demonstrated why Plaintiffs’ claims are barred by judicial

4

estoppel. As the Complaint reveals, this action is based on conduct which occurred during the

5

loan origination process, as well as the subsequent securitization of the loan and ensuing initiation

6

of foreclosure proceedings. The Financial Analysis Securitization Title Report demonstrates that

7

these events occurred in 2006 and 2009. Accordingly, Plaintiffs were required to disclose the

8

instant claims in each of the three bankruptcy actions they initiated, either separately or together,

9

in 2012, 2013 and 2014. See 11 U.S.C. 541(a)(1) (providing that the bankruptcy estate “is

10

United States District Court
Northern District of California

11
12
13

comprised of . . . all legal or equitable interests of the debtor.”); Kane v. Nat’l Union Fire Ins. Co.,
535 F.3d 380, 384-85 (9th Cir. 2008) (“Pursuant to the Bankruptcy Code, debtors are under a
continuing duty to disclose all pending and potential claims.”). They did not do so. See Req. for
Judicial Notice, Docket Item No. 12, at Exs. G, H, L, M.2
6.

14
15
16
17

Instead, as the bankruptcy court dockets demonstrate,3 what Plaintiffs did is initiate

and then cause to be dismissed three bankruptcy cases, back to back, over the span of three years.
The first case, 12-55334, was initiated by Plaintiffs on July 19, 2012, and dismissed on May 13,
2013. The second case, 13-56125, was initiated by Felipe Natividad on November 25, 2013, and
dismissed on February 27, 2014. The third case, 14-51333, was initiated by Plaintiffs on March

18
28, 2014, and then dismissed on August 25, 2014. The necessary implication that arises from this
19
pattern of opening bankruptcy cases ad seriatim is that Plaintiffs never actually intended to use the
20
bankruptcy process to restructure their finances. If they did, they would not have allowed their
21
22
23

cases to be dismissed. In reality, what is apparent is that Plaintiffs wanted to advantage
themselves of the automatic bankruptcy stay, which they did for three years. But Plaintiffs cannot
do that and then pursue claims against creditors that they were obligated to disclose several times

24
25
26
27
28

2

The Request for Judicial Notice is GRANTED. See Fed. R. Evid. 201(b); see also Lee, 250 F.3d
at 689 (“[A] court may take judicial notice of ‘matters of public record.’”)
3

The court also takes judicial notice of the bankruptcy court dockets in Case Nos. 12-55334, 1356125 and 14-51333.
4
Case No.: 5:15-cv-02359-EJD
ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS

1

previously. Such a practice is certainly an example of “playing fast and loose with the courts” and

2

cannot be tolerated.

3

Thus, the court finds under these circumstances that Plaintiffs’ claims are barred by

4

judicial estoppel. Accordingly, Defendants’ Motion to Dismiss is GRANTED and the Complaint

5

is DISMISSED WITHOUT LEAVE TO AMEND. Judgment will be entered in favor of

6

Defendants and the Clerk shall close this file.

7
8
9
10

United States District Court
Northern District of California

11

IT IS SO ORDERED.
Dated: September 17, 2015
______________________________________
EDWARD J. DAVILA
United States District Judge

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

5
Case No.: 5:15-cv-02359-EJD
ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS