Ichimura v. Deutche Bank National Trust Company et al
Filing
86
ORDER AFFIRMING MAGISTRATE JUDGE'S ORDER DENYING LEAVE TO FILE AMENDED COMPLAINT re 84 - Signed by CHIEF JUDGE SUSAN OKI MOLLWAY on 8/29/13. "The court affirms the Magistrate Judge's order of June 28, 2013, denying le ave to file the proposed First Amended Complaint. The Clerk of Court is ordered to enter judgment in favor of Defendants." (emt, )CERTIFICATE OF SERVICEParticipants registered to receive electronic noti fications received this document electronically at the e-mail address listed on the Notice of Electronic Filing (NEF). Participants not registered to receive electronic notifications were served by first class mail on the date of this docket entry
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
ERLENE LAHAPA ICHIMURA,
trustee of the Erline Luka
Lahapa Cabrinha Living Trust
dated January 29, 2009,
)
)
)
)
)
Plaintiff,
)
)
vs.
)
)
DEUTSCHE BANK NATIONAL TRUST )
CO., Trustee of the
)
Harborview Mortgage Loan
)
Trust, Series 2006-14;
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ONEWEST BANK, FSB; ENLOE
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ENTERPRISES, INC.; PRIVATE
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CAPITAL GROUP, INC.; PARKER
)
ENLOE; and ANDREW SHIRLEY,
)
)
Defendants.
)
)
_____________________________ )
CIVIL. NO. 11-00318 SOM/RLP
ORDER AFFIRMING MAGISTRATE
JUDGE’S ORDER DENYING LEAVE
TO FILE AMENDED COMPLAINT
ORDER AFFIRMING MAGISTRATE JUDGE’S ORDER
DENYING LEAVE TO FILE AMENDED COMPLAINT
I.
INTRODUCTION.
Before the court is Plaintiff’s appeal of a Magistrate
Judge’s order of June 28, 2013, denying Plaintiff’s motion for
leave to file an Amended Complaint.
The court affirms that
thorough and well-reasoned order.
II.
BACKGROUND FACTS.
The facts of this case have been set forth in the
court’s orders of May 16 and June 28, 2013.
incorporated by reference.
below.
Those facts are
The court summarizes relevant facts
On May 18, 2011, Plaintiff Erlene Lahapa Ichimura, the
sole trustee of the Erlene Luka Lahapa Cabrinha Living Trust
dated January 29, 2009, filed the original Complaint in this
action.
Ichimura claimed that Cabrinha, now deceased, was
defrauded by Defendants Enloe Enterprises, Inc., Private Capital
Group, Inc., Parker Enloe, and Andrew Shirley (collectively, the
“Enloe Defendants”) in connection with a mortage refinancing.
Ichimura alleged that the Enloe Defendants convinced Cabrinha to
refinance her existing mortgage and take cash out, then stole the
equity she had built up.
After the refinancing, Cabrinha
transferred her real property into her trust.
Although the original Complaint sought rescission of
the loan, it lacked any factual allegations concerning the
lender’s conduct that might have justified rescission of the
loan, other than a bald statement that Enloe Enterprises had
acted as an agent of the original lender, Express Capital
Lending.
On June 12, 2012, the court issued a Rule 16 scheduling
order for this case.
That scheduling order stated, “All motions
. . . to amend the pleadings shall be filed by November 23,
2012.”
See ECF No. 35, ¶ 5.
No motion to amend the Complaint
was filed by that date.
Pages 15 to 16 of the court’s order of May 16, 2013,
which granted summary judgment in favor of Defendants, stated
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that Plaintiff had “fail[ed] to demonstrate any conduct on the
part of the original lender that justifie[d] rescission of the
loan under any count in the Complaint.”
The court noted that the
Complaint’s allegations instead focused solely on the original
lender’s alleged agency relationship with the Enloe Defendants.
In footnote 2 on page 13 of the of the court’s order of
May 16, 2013, the court noted that the Opposition to the motion
for summary judgment argued that the Bank Defendants in this case
had violated Hawaii’s Unfair and Deceptive Acts and Practices
(“UDAP”) laws, chapter 480 of Hawaii Revised Statutes, by not
giving Plaintiff a loan modification.
Because no such claim was
made in the original Complaint, the court ruled that it was not
properly before it.
Page 21 of the court’s order of May 16, 2013, stated
that the court was refraining from entering judgment in this
matter “to allow Ichimura to file a motion that requests leave to
file any motion Ichimura feels is necessary, including a motion
seeking leave to file an Amended Complaint that prays for
rescission of the loan based on the original lender’s conduct or
damages based on settlement negotiations.
The court expresses no
inclination as to how any such motion should be decided.”
On June 6, 2013, Plaintiff filed a motion to amend her
Complaint.
The proposed First Amended Complaint contains
numerous allegations concerning the original lender’s wrongful
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conduct.
It also alleges that Shirley told Cabrinha that he was
working for the original lender.
The proposed First Amended
Complaint seeks to assert 1) claims for rescission based on the
original lender’s conduct, 2) claims that the current lender and
servicer violated UDAP laws by purchasing a defective loan, and
3) claims against the current lender and servicer for violations
of UDAP laws in the form of refusing to modify the loan.
Plaintiff’s motion argues that the proposed claims were
inadvertently omitted from the original Complaint or arose after
its filing.
Plaintiff implies that she did not seek leave to
amend earlier because ongoing settlement discussions put the case
“on hold.”
Plaintiff claims that the Bank Defendants knew about
the proposed claims as early as December 2012 (after the Rule 16
scheduling order deadline), when Plaintiff’s expert report was
sent to them.
On June 28, 2013, the Magistrate Judge denied
Plaintiff’s motion for leave to file the proposed First Amended
Complaint.
The Magistrate Judge reasoned that Plaintiff had not
even attempted to amend the scheduling order.
Nevertheless, the
Magistrate Judge treated the motion to amend as one to amend the
scheduling order.
Because Plaintiff failed to show good cause
for having failed to timely seek to amend the scheduling order,
the Magistrate Judge denied the request.
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With respect to the claims that the original lender
committed acts justifying rescission and that the current Bank
Defendants knew or should have known of defects in the loan when
they purchased the loan, the Magistrate Judge ruled that
Plaintiff had been dilatory in seeking leave to amend.
That is,
Plaintiff had the facts underlying these claims at the time the
original Complaint was filed, but failed to timely assert the
claims.
With respect to the failure to modify the loan claim,
the Magistrate Judge noted that Plaintiff knew of that conduct
before the deadline to file a motion seeking leave to amend the
pleadings.
In addition, allowing amendment would necessitate
reopening discovery, and discovery had closed on April 26, 2013.
The Magistrate Judge ruled that the prejudice to the Bank
Defendants if discovery were reopened was an additional reason to
deny the motion.
III.
STANDARD.
Under Local Rule 74.1 and 28 U.S.C. § 636(b)(1)(A), a
district judge may set aside a magistrate judge’s nondispositive
order if it is “clearly erroneous or contrary to law.”
See Bhan
v. NME Hosp., Inc., 929 F.2d 1404, 1414-15 (9th Cir. 1991).
threshold of the “clearly erroneous” test is high.
The
“A finding is
‘clearly erroneous’ when although there is evidence to support
it, the reviewing court on the entire evidence is left with the
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definite and firm conviction that a mistake has been committed.”
United States v. U.S. Gypsum Co., 333 U.S. 364, 395 (1948);
Burdick v. Comm’r Internal Revenue Serv., 979 F.2d 1369, 1370
(9th Cir. 1992) (“A finding of fact is clearly erroneous if we
have a definite and firm conviction that a mistake has been
committed.”).
IV.
ANALYSIS.
When a district court files a pretrial scheduling order
pursuant to Rule 16 of the Federal Rules of Civil Procedure, the
“good cause” standard set forth in that rule governs amendment of
pleadings.
Johnson v. Mammoth Recreations, Inc., 975 F.2d 604,
608 (9th Cir. 1992); Fed. R. Civ. P. 16(b)(4) (“A schedule may be
modified only for good cause and with the judge’s consent.”).
Rule 16(b)’s “good cause” standard primarily considers the
diligence of the party seeking the amendment.
at 609.
Johnson, 975 F.2d
In other words, this court may modify the pretrial
schedule “if it cannot reasonably be met despite the diligence of
the party seeking the extension.”
Id.
Carelessness is not
compatible with a finding of diligence and offers no reason for a
grant of relief.
Id.
Although the existence or degree of
prejudice to the party opposing the modification might supply an
additional reason to deny a motion to modify a scheduling order,
the focus of the inquiry is on the moving party’s reasons for
seeking modification.
Id.
“If that party was not diligent, the
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inquiry should end.”
Id.
Accord In re W. States Wholesale Nat’l
Gas Antitrust Litigation, 715 F.3d 716, 737 (9th Cir. 2013).
Plaintiff fails to demonstrate that the Magistrate
Judge clearly erred in denying her leave to file the proposed
First Amended Complaint because the scheduling order was not
modified.
Nor is there any dispute that, with respect to the
proposed claims that the original lender committed acts
justifying rescission and that the current Bank Defendants knew
or should have known of defects with the loan when they purchased
the loan, Plaintiff knew of the facts underlying those claims at
the time the original Complaint was filed.
Plaintiff’s failure
to timely assert claims based on those facts was not justified.
At best, Plaintiff implied that she had not sought amendment
because she did not want to affect settlement discussions.
That
Plaintiff did not want to run up fees or complicate settlement
discussions by filing an amended complaint does not demonstrate
diligence with respect to her failure to timely assert known
claims.
The Magistrate Judge correctly determined that Plaintiff
had not shown “good cause” for modifying the Rule 16 scheduling
order’s deadline regarding amendment of pleadings.
Plaintiff
therefore fails to demonstrate that the Magistrate Judge clearly
erred as to this point.
Plaintiff’s claimed “reasonable belief” that the
original Complaint contained the unpled claims does not equate
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with “good cause” for purposes of determining whether she was
dilatory in seeking to amend the Complaint.
As noted above,
although the original Complaint made the bald statement that
Enloe was the original lender’s agent, there were no factual
allegations supporting that claimed agency relationship or facts
describing any wrongful conduct on behalf of the original lender.
Thus, although the original Complaint sought rescission, the Bank
Defendants were certainly not on notice that that rescission was
based on the original lender’s conduct.
There was no
“reasonable” basis for any belief that the original Complaint
properly pled the claims in issue.
Plaintiff’s carelessness with
respect to asserting these claims does not amount to “good cause”
to amend the scheduling order.
Johnson, 975 F.2d at 609.
Plaintiff is incorrect in arguing that the summary
judgment order essentially amended the scheduling order.
That
order stated that the court would refrain from entering judgment
“to allow Ichimura to file a motion that requests leave to file
any motion Ichimura feels is necessary, including a motion
seeking leave to file an Amended Complaint that prays for
rescission of the loan based on the original lender’s conduct or
damages based on settlement negotiations.
The court expresses no
inclination as to how any such motion should be decided.”
The
court said only that Plaintiff could file an appropriate motion
with the Magistrate Judge before entry of judgment.
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The court
did not say the motion should be granted.
Moreover, even if the
motion seeking leave to amend had been timely under Plaintiff’s
interpretation of the summary judgment order, denying the motion
makes sense because of the prejudice to the Bank Defendants.
The original Complaint was filed on May 18, 2011.
More
than two years later, on June 6, 2013, Plaintiffs sought to file
her First Amended Complaint.
This was more than half a year
after the scheduling order deadline for doing so.
This court’s
allowance of multiple amendments in other cases does not justify
modification of the scheduling order in this case.
Here, the
Bank Defendants would be prejudiced by the reopening of discovery
in response to the proposed amended claims.
Although Plaintiff
will be prejudiced by the court’s refusal to allow her to modify
the scheduling order, that refusal is based on Plaintiff’s own
lack of diligence.
Plaintiff also sought to amend her Complaint to add a
claim that arose in October 2012, when Bank Defendants denied her
request to modify the loan.
Plaintiff fails to show good cause
to amend the Complaint to add this claim.
She knew of the facts
underlying this claim in the month preceding the scheduling order
deadline to amend pleadings.
She was not diligent when she
failed to attempt to add this claim for many months.
This court
declines to add new claims to this case, in which the discovery
cutoff has past.
New claims would essentially restart this case.
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Although the court declines to modify the scheduling
order to allow Plaintiff to amend the present Complaint to add a
claim regarding post-Complaint conduct as to good-faith
settlement discussions, the court is not prohibiting Plaintiff
from filing a new lawsuit based on post-Complaint conduct.
This
will reduce any potential prejudice to Plaintiff while allowing
Plaintiff to immediately appeal this court’s rulings in this
case.
To further reduce prejudice to Plaintiff, the court will
waive the applicable filing fee for any complaint filed in this
court in which Plaintiff asserts that Bank Defendants did not
conduct settlement discussions in good faith when they refused to
modify the loan in October 2012.
Plaintiff must show the Clerk
of Court a copy of this order if she files a new action in
reliance on this fee waiver.
The court also stresses that it is
not here relieving Plaintiff of the effect of any statute of
limitation or of any jurisdictional requirement.
V.
CONCLUSION.
The court affirms the Magistrate Judge’s order of June
28, 2013, denying leave to file the proposed First Amended
Complaint.
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The Clerk of Court is ordered to enter judgment in
favor of Defendants.
IT IS SO ORDERED.
DATED: Honolulu, August 29, 2013.
/s/ Susan Oki Mollway
Susan Oki Mollway
Chief United States District Judge
Ichimura v. Deutsche Bank National Trust Co, et al., Civ. No. 11-00318 SOM/RLP; ORDER
AFFIRMING MAGISTRATE JUDGE’S ORDER DENYING LEAVE TO FILE AMENDED COMPLAINT
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