U.S. Bank National Association v. Friedrichs et al

Filing 172

ORDER Granting 136 Counterdefendants' Motion to Dismiss Albert Zappia's Second Amended Counterclaim With Prejudice; Granting 153 Counterclaimant Sandy Zappia's Motion For Leave to File A Third Amended Counterclaim; Denying 157 Albert Zappia's Motion for Leave to File Third Amended Counterclaim; Denying as moot 134 Counterdefendants' Motion to Dismiss Sandy Zappia's Second Amended Counterclaim. Signed by Judge Gonzalo P. Curiel on 12/17/2013. (srm)

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UNITED STATES DISTRICT COURT

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SOUTHERN DISTRICT OF CALIFORNIA

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U.S. BANK NATIONAL
ASSOCIATION, a national banking
association, as successor-in-interest to
the FEDERAL DEPOSIT
INSURANCE CORPORATION,
Receiver for Park National Bank,

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CASE NO. 12cv2373-GPC(KSC)
ORDER GRANTING
COUNTERDEFENDANTS’
MOTION TO DISMISS ALBERT
ZAPPIA’S SECOND AMENDED
COUNTERCLAIM WITH
PREJUDICE; GRANTING
COUNTERCLAIMANT SANDY
ZAPPIA’S MOTION FOR LEAVE
TO FILE A THIRD AMENDED
COUNTERCLAIM; DENYING
ALBERT ZAPPIA’S MOTION
FOR LEAVE TO FILE A THIRD
AMENDED COUNTERCLAIM;
AND DENYING
COUNTERDEFEDANTS’
MOTIONS TO DISMISS SANDY
ZAPPIA’S SECOND AMENDED
COUNTERCLAIM AS MOOT

Plaintiff,

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vs.

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SANDY K. FRIEDRICHS, an
individual; and DOES 1 through 50,
inclusive,

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Defendant;

[Dkt. Nos. 134, 136, 153, 157.]

AND RELATED
COUNTERCLAIMS.

On September 6, 2013, Counterclaimants Sandy Zappia1 and Albert Zappia filed
a second amended counterclaim against Counterdefendants U.S. Bank, as successor to
the Federal Deposit Insurance Corporation, as Receiver for Park National; Nicholas

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Sandy Zappia is also known as Sandy Friedrichs, the named Defendant.
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Ocepek; Jocelyn Bigall; Robin Tharpe; Jacqueline Barlow; Patrick Nygard; and Joshua

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Wayser. (Dkt. No. 130.) On September 23, 2013, Counterdefendants U.S. Bank

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National Association, Bank, (“U.S. Bank”) and Joshua Wayser filed a motion to

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dismiss the second amended counterclaim. (Dkt. No. 134.) On September 23, 2013,

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Counderdefendant Nicholas Ocepek filed a joinder to the motion to dismiss. (Dkt. No.

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135.) Counterdefendants Jocelyn Bigall and Patrick Nygard also filed a motion to

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dismiss the second amended counterclaim. (Dkt. No. 136.)

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On September 30, 2013, Counterclaimant Sandy Zappia, filed a notice of

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substitution of attorney. (Dkt. No. 146.) The substitution of attorney applies only to

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Sandy Zappia, not Albert Zappia.

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Counterclaimant Sandy Zappia, with counsel, filed an opposition on October 22,

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2013.2 (Dkt. No. 148.) Counterclaimant Albert Zappia, still proceeding pro se, filed

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an opposition on October 22, 2013. (Dkt. No. 150.) On November 14, 2013,

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Counterdefendants filed their replies. (Dkt. Nos. 159, 160, 162.)

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On November 4, 2013, Counterclaimant Sandy Zappia filed a motion for leave

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to file a third amended counterclaim. (Dkt. No. 153.) On November 12, 2013, Albert

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Zappia also filed a motion for leave to file a third amended counterclaim. (Dkt. No.

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157.) Counterdefendants U.S. Bank, Ocepek, Bigall and Nygard filed their oppositions

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on November 22 and 24, 2013. (Dkt. Nos. 163, 165, 167.) On December 3, 2013,

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Counterclaimants filed their replies. (Dkt. Nos. 169, 170.)

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The motions are submitted on the papers without oral argument, pursuant to

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Civil Local Rule 7.1(d)(1). After a review of the briefs, supporting documentation,

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and the applicable law, the Court GRANTS Counterdefendants’ motion to dismiss

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Albert Zappia’s second amended counterclaim with prejudice; and DENIES Albert

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Zappia’s motion for leave to file a third amended counterclaim. The Court also

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GRANTS Counterclaimant Sandy Zappia’s motion for leave to file a third amended

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On October 22, 2013, Sandy Zappia filed a notice of dismissal as to Defendants Ocepek,
Bigall, Thorpe, Barlow, Nygard and Wayser. (Dkt. No. 151.)
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counterclaim; and DENIES Counterdefendants’ motions to dismiss Sandy Zappia’s

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second amended counterclaims as MOOT.

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Procedural Background

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On July 13, 2012, Plaintiff U.S. Bank filed a complaint in the Superior Court of

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San Diego against Defendant Sandy Friedrichs, also known as Sandy Zappia, for

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appointment of receiver and judicial foreclosure. On September 28, 2012, Defendant

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Sandy Zappia and non-party Albert Zappia, Defendant’s husband, proceeding pro se,

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removed the case to this Court. (Dkt. No. 1.) On October 12, 2012, the case was

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transferred to the undersigned judge. (Dkt. No. 2.) On October 15, 2012, Defendant

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filed an ex parte motion for temporary restraining order and preliminary injunction

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seeking to restrain Plaintiff from foreclosing Defendant’s business property located at

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1340 La Mirada Drive, San Marcos, California 92078. (Dkt. No. 3.) On October 18,

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2012, the Court denied Defendant’s ex parte motion for a temporary restraining order

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because the Court concluded that Defendant had not shown irreparable harm since

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Plaintiff had moved the sale of the property to November 15, 2012. (Dkt. No. 6.) After

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further briefing and hearing oral argument on the motion for preliminary injunction, on

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November 9, 2012, the Court granted Defendant’s motion for preliminary injunction

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pending further briefing. (Dkt. Nos. 30, 33.)

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On November 1, 2012, Counterclaimants Sandy Zappia and Albert Zappia filed

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a counterclaim against Counterdefendants U.S. Bank, Nicholas Ocepek, Erica

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Itskovich, Jocelyn Bigall and Patrick Nygard. (Dkt. No. 19-1.) On February 13, 2013,

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the Court granted Albert Zappia’s motion to intervene; denied Defendants’ motion to

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disqualify Plaintiff’s attorney Wayser and Tanada; denied Defendants’ motion to

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dismiss; granted Counterdefendants U.S. Bank, Nygard and Bigall’s motions to dismiss

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the counterclaim; granted Counterdefendant Ocepek’s motion to dismiss and dismissed

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Counterdefendant Itskovich with prejudice. (Dkt. No. 102.) The Court granted

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Counterclaimant Sandy Zappia leave to file an amended counterclaim. (Id.) On

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February 13, 2013, the Court issued an order dissolving the preliminary injunction for
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failure to satisfy the factors to support a preliminary injunction and failure to comply

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with bond requirements under the Civil Local Rules. (Dkt. No. 104.)

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An amended counterclaim was filed on March 14, 2013. (Dkt. No. 106.) On

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August 30, 2013,the Court granted Counterclaimants’ motion for leave to file a second

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amended counterclaim and denied Coutnerdefendants’ motions to dismiss as moot.

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(Dkt. No. 129.)

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On September 6, 2013, Counterclaimants filed an second amended counterclaim.

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(Dkt. No. 130.) On September 23, 2013, Counterdefendants U.S. Bank, Ocepek,

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Wayser and Bigall filed motions to dismiss the second amended counterclaim. (Dkt.

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Nos. 134, 135, 136.)

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On November 4, 2013, Counterclaimant Sandy Zappia filed a motion for leave

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to file a third amended counterclaim against Counterdefendant U.S. Bank only. (Dkt.

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No. 153.) The proposed second amended counterclaim alleges causes of action for

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cancellation of instruments; violation of the Fair Debt Collection Practices Act, 15

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U.S.C. § 1692; unfair business practices under California Business & Professions Code

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section 17200 et seq.; declaratory relief; accounting; unjust enrichment; and quiet title.

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(Id.) On November 12, 2013, Counterclaimant Albert Zappia filed a motion for leave

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to file a third amended counterclaim against Counterdefendants U.S. Bank, Robin

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Tharpe; Jacqueline Barlow; Jocelyn Bigall; and Patrick Nygard. (Dkt. No. 157.) He

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alleges causes of action that U.S. Bank is not the real party in interest; cancellation of

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instruments; violation of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692;

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violation of California Business & Professions Code section 1700 et seq.; declaratory

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relief, accounting; quiet title; and RICO violations. (Id.)

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Factual Background

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Around April 9, 2007, GreenPoint Mortgage Funding lent Defendant Sandy

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Friedrichs, on a recourse basis, the principal sum of $340,000, secured by the property

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located at 1340 La Mirada Drive, San Marcos, CA 92078. (Dkt. No. 1-1, Compl. ¶ 5.)

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The loan was memorialized in a written Promissory Note. (Id. ¶ 6; Ex. 2.) On April
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18, 2007, GreenPoint recorded a “Deed of Trust, Assignment of Rents, Security

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Agreement and Fixture Filing” (“Deed of Trust”) with the San Diego County

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Recorder’s Office. (Id. ¶ 7; Ex. 3.) Defendant executed the Deed of Trust as trustor,

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to GreenPoint, as beneficiary, and to Marin Conveyancing Corp., as trustee. (Id.) On

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August 1, 2008, Park National recorded an “Assignment of Deed of Trust” whereby

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GreenPoint assigned all of its right, title, and interest in, to and under the Note, Deed

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of Trust and Assignment to Park National. (Id. ¶ 10; Ex. 4.) On October 30, 2009, the

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FDIC placed Park National into receivership and assigned the assets of Park National,

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including the Loan, to U.S. Bank. (Id. ¶ 10; Ex. 5.)

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Section 3 of the Deed of Trust contains a provision entitled, Assignment of

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Rents; Appointment of Receiver; Lender in Possession which assigns to Lender rents,

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issues, and profits from the property. (Id. ¶ 8.) It also allows Lender to collect, sue for

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and compromise rents and to direct tenants of the Property to pay all rent to, or as

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directed by Lender upon the occurrence of an event of default; and also allows the

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Lender to seek an appointment of receiver through the courts. (Id.)

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Defendant failed to make her monthly payments starting in March 2012. (Id. ¶

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11.) Defendant’s failure to pay the loan is a default on the obligations for which the

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deed of trust is security. (Id. ¶ 12.) As of June 18, 2012, the principal amount due and

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owing was $282,834.66, plus accrued default interest, late charges, and other fees.

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(Id.) Plaintiff seeks specific performance for appointment of receiver and judicial

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foreclosure against Defendant Sandy Zappia.

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In the second amended counterclaim, Counterclaimants allege that U.S. Bank is

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not the lawful owner of the Note and the assignment of the Note and Deed of Trust was

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void.
Discussion

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A.

Standing as to Albert Zappia

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In the Court’s prior order filed on February 13, 2013, the Court concluded that

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Albert Zappia has not shown he has standing to assert claims against U.S. Bank and
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granted Counterdefendant U.S. Bank’s motion to dismiss Albert Zappia’s counterclaim

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against it. (Dkt. No. 102 at 10.)

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In the instant motions to dismiss, Counterdefendants argue that Albert Zappia

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has no standing to assert any claims against it because the allegations in the

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counterclaim all arise from the loan, and not the property. Counterclaimant Albert

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Zappia does not address the standing issue in his briefs.

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Article III, section 2 of the United States Constitution requires that a plaintiff has

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standing to bring a claim. In order “to satisfy Article III' s standing requirements, a

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plaintiff must show (1) it has suffered an ‘injury in fact’ that is (a) concrete and

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particularized and (b) actual or imminent, not conjectural or hypothetical; (2) the injury

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is fairly traceable to the challenged action of the defendant; and (3) it is likely, as

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opposed to merely speculative, that the injury will be redressed by a favorable

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decision.” Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S.

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167, 180–81 (2000) (citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 560–61

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(1992)); cf. Bateman v. Countrywide Home Loans, 12-0033 SOM/BMK, 2012 WL

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5593228, at 4 (D. Haw. Nov. 14, 2012) (borrowers who are not parties to or

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beneficiaries of a pooling and service agreement lack standing to challenge alleged

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violations of such agreements). Here, Albert Zappia is not a party to the loan

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documents and he does not demonstrate that he has standing to allege claims against

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U.S. Bank. Accordingly, the Court GRANTS Counterdefendant’s motion to dismiss

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Albert Zappia’s second amended counterclaim with prejudice and DENIES Albert

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Zappia’s motion for leave to file a third amended counterclaim.

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B.

Legal Standard Under Federal Rule of Civil Procedure 15(a)

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Under Federal Rule of Civil Procedure 15(a), leave to amend a complaint after

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a responsive pleading may be allowed by leave of the court and such leave “shall be

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freely given when justice so requires.” Fed. R. Civ. P. 15(a). Granting leave to amend

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rests in the sound discretion of the trial court. Internat’l Ass’n of Machinists &

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Aerospace Workers v. Republic Airlines, 761 F.2d 1386, 1390 (9th Cir. 1985). This
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discretion must be guided by the strong federal policy favoring the disposition of cases

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on the merits and permitting amendments with “extreme liberality.” DCD Programs

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Ltd. v. Leighton, 833 F.2d 183, 186 (9th Cir. 1987). This liberality is “applied even

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more liberally to pro se litigants.” Eldridge v. Block, 832 F.2d 1132, 1135 (9th Cir.

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1987).

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“Five factors are taken into account to assess the propriety of a motion for leave

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to amend: bad faith, undue delay, prejudice to the opposing party, futility of

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amendment, and whether the plaintiff has previously amended the complaint.” Johnson

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v. Buckley, 356 F.3d 1067, 1077 (9th Cir. 2004) (citing Nunes v. Ashcroft, 348 F.3d

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815, 818 (9th Cir. 2003)). In practice, however, courts more freely grant plaintiffs

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leave to amend pleadings in order to add claims than new parties. Union Pacific R.R.

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Co. v. Nevada Power Co., 950 F.2d 1429, 1432 (9th Cir. 1991).

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Here, Counterclaimant Sandy Zappia, with new counsel, seeks leave to file a

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third amended counterclaim. She contends that the proposed amendment is not made

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in bad faith and not futile as the law in California has changed under Glaski v. Bank

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of America, Nat’l Assoc., 218 Cal. App. 4th 1079 (2013). Counterdefendants argue

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that counterclaimant has had numerous opportunities to amend the deficiencies in the

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counterclaim and has failed to do so. They also argue the proposed amendments are

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futile.

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“[A] proposed amendment is futile only if no set of facts can be proved under the

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amendment to the pleadings that would constitute a valid and sufficient claim or

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defense.” Miller v. Rykoff-Sexton, Inc., 845 F.2d 209, 214 (9th Cir. 1988). Courts

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ordinarily do not consider the validity of a proposed amended pleading in deciding

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whether to grant leave to amend and defer consideration of challenges to the merits of

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a proposed amendment until after leave to amend is granted and the amended pleadings

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are filed. Netbula, LLC v. Distinct Corp., 212 F.R.D. 534, 539 (N.D. Cal. 2003)

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(citation omitted); accord Green Valley Corp. v. Caldo Oil Co., No. 09cv4028-LHK,

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2011 WL 1465883, at *6 (N.D. Cal. April 18, 2011) (noting “the general preference
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against denying a motion for leave to amend based on futility.”).

Arguments

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concerning the sufficiency of the proposed pleadings, even if meritorious, is better left

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for briefing on a motion to dismiss. Lillis v. Apria Healthcare, No. 12cv52-IEG(KSC),

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2012 WL 4760908, at * 1 (S.D. Cal. Oct. 5, 2012).

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Here, both parties argue, in detail, the merits of the Glaski case. However, at this

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stage of the proceedings, the Court need not consider the validity of the proposed

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amended pleading, and in light of the Ninth Circuit’s extremely liberal policy favoring

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leave to amend, the Court GRANTS Counterclaimant Sandy Zappia’s motion for leave

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to file a third amended counterclaim. See Lillis, 2012 WL 4760908 at *1. The Court

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also notes that now that Sandy Zappia is no longer proceeding pro se and has retained

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counsel, the case will now be able to proceed efficiently on the merits.
Conclusion

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Based on the above, the Court GRANTS Counterdefendants’ motion to dismiss

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Albert Zappia’s second amended counterclaim for lack of standing with prejudice and

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DENIES Albert Zappia’s motion for leave to file a third amended counterclaim. The

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Court also GRANTS Counterclaimant Sandy Zappia’s motion for leave to file a third

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amended counterclaim, and DENIES Counterdefendants’ motions to dismiss Sandy

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Zappia’s second amended counterclaim as MOOT. Counterclaimant Sandy Zappia

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shall file the proposed third amended counterclaim within seven (7) days of the filing

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of this order.

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IT IS SO ORDERED.

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DATED: December 17, 2013
HON. GONZALO P. CURIEL
United States District Judge

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