St. James v. JP Morgan Chase Bank Corporation et al
Filing
73
ORDER Denying Motion To Dimiss [DKT. NO. 58] Plaintiff Samuel St. James's Second Amended Complaint.On the basis of the foregoing, JPMorgan, Wells Fargo, CRC, and U.S. Banks Motion to Dismiss [Dkt. No. 58] Plaintiff Samuel St. James 039;s Second Amended Complaint, filed May 25, 2018, is HEREBY DENIED. The Moving Defendants are ORDERED to file their answer to Plaintiff's Second Amended Complaint byNovember 21, 2018. If the Moving Defendants file a motion for reconsideration of the instant Order, it will not affect their deadline to file their answer. If necessary in light of any rulings on a motion for reconsideration, this Court will allow the Moving Defendants to file an amended answer to the Second Amended Complaint. The Clerk's Office is DIRECTED to terminate Defendants Washington Mutual Bank, FSB, Washington Mutual Holding Inc., and Wells Fargo Bank, N.A. because they are not named as parties in the Second Amended Complaint. Signed by JUDGE LESLIE E. KOBAYASHI on 10/31/2018. (cib, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
SAMUEL ST. JAMES,
)
)
Plaintiff,
)
)
vs.
)
)
JP MORGAN CHASE BANK
)
CORPORATION, ETC., ET AL.,
)
)
Defendants.
)
_____________________________ )
CIVIL 16-00529 LEK-KSC
ORDER DENYING MOTION TO DISMISS [DKT. NO. 58]
PLAINTIFF SAMUEL ST. JAMES’S SECOND AMENDED COMPLAINT
On May 25, 2018, Defendants JPMorgan Chase Bank, N.A.
(“JPMorgan”); Wells Fargo Bank, N.A. (“Wells Fargo”); California
Reconveyance Company (“CRC”); and U.S. Bank National Association,
as Trustee, Successor in Interest to Wachovia Bank, National
Association, as Trustee, for Merrill Lynch Mortgage Investors
Inc. Mortgage Pass-Through Certificates, Series MLMI 2005-A5
(“U.S. Bank,” and all collectively “Moving Defendants”), filed
their Motion to Dismiss [Dkt. No. 58] Plaintiff Samuel
St. James’s Second Amended Complaint (“Motion”).
[Dkt. no. 65.]
Plaintiff Samuel St. James (“Plaintiff”) filed his memorandum in
opposition on July 9, 2018, and the Moving Defendants filed their
reply on September 17, 2018.
[Dkt. nos. 67, 70.]
On
September 27, 2018, this Court issued an entering order finding
the Motion suitable for disposition without a hearing, pursuant
to Rule LR7.2(d) of the Local Rules of Practice for the United
States District Court for the District of Hawaii (“Local Rules”),
and ruling that the Motion was denied.
instant Order supersedes that ruling.
[Dkt. no. 72.]
The
The Motion is hereby
denied for the reasons set forth below.
BACKGROUND
The factual and procedural background of this case is
set forth in this Court’s September 29, 2017 “Order Granting in
Part and Denying in Part Defendants JP Morgan Chase Bank, N.A.;
Wells Fargo Bank, N.A.; California Reconveyance Company; and U.S.
Bank National Association’s ‘Motion to Dismiss [10] First Amended
Complaint’; and Granting Defendant Deborah Brignac’s ‘Motion to
Dismiss [ECF No. 10] First Amended Complaint Filed October 24,
2016’” (“9/29/17 Order”).
[Dkt. no. 45.1]
Plaintiff filed his First Amended Complaint pro se.
The 9/29/17 Order described this case as “aris[ing] from
1
The 9/29/17 Order is also available at 2017 WL 4392040.
The First Amended Complaint and the 9/29/17 Order referred to
JP Morgan Chase Bank, N.A. as “JP Morgan.” See, e.g., First
Amended Complaint at ¶ 2; 9/29/17 Order, 2017 WL 4392040, at *1.
The Second Amended Complaint and the instant Motion refer to
JPMorgan Chase Bank N.A., doing business as Chase Bank, as
“JPMorgan.” See, e.g., Second Amended Complaint at ¶ 3; Motion
at 1. JP Morgan and JPMorgan refer to the same defendant.
The 9/29/17 Order referred to: (1) the Moving Defendants as
the “Bank Defendants,” and their motion to dismiss the First
Amended Complaint, [filed 11/14/16 (dkt. no. 14),] as the “Bank
Motion”; and (2) Defendant Deborah Brignac’s (“Brignac”) motion
to dismiss the First Amended Complaint, [filed 2/24/17 (dkt.
no. 32),] as the “Brignac Motion.” 9/29/17 Order, 2017 WL
4392040, at *1.
2
Plaintiff’s unsuccessful attempt to obtain a loan modification
for the mortgage on his home in San Diego, California (‘the
Property’) under the Home Affordable Modification Program
(‘HAMP’).”
2017 WL 4392040, at *1.
The First Amended Complaint alleged the following
claims: a fraud claim against the Bank Defendants, Brignac, and
Washington Mutual Holding, Inc. (“WMHI”)2 based on
misrepresentations in the loan modification process (“Count I”);
[First Amended Complaint at ¶¶ 48-69;] a breach of contract claim
against JP Morgan, based upon its alleged failure to comply with
the HAMP three-month trial period plan (“TPP”) agreement
(“Count II”); [id. at ¶¶ 70-80;] a fraud claim against JP Morgan,
Wells Fargo, and CRC based on misrepresentations in a case
Plaintiff filed in a California federal court (“Count III”); [id.
at ¶¶ 81-90;] an unclean hands claim against the Bank Defendants
and Defendant Alaw3 based on their alleged actions and omissions
2
According to the First Amended Complaint, Washington
Mutual Bank, FSB (“WMB”) reorganized in bankruptcy to WMHI in
2012. [First Amended Complaint at ¶ 10.] Although both WMHI and
WMB were named as defendants in the First Amended Complaint,
Plaintiff apparently did not complete service upon either entity,
and they were not named as defendants in the Second Amended
Complaint.
3
Plaintiff identified Alaw as the “successor to, ‘CRC’, by
purchase from” JP Morgan. [First Amended Complaint at ¶ 14.]
The Second Amended Complaint includes Defendant Albertelli Law
Partners, LLC, which Plaintiff refers to as “Alaw,” see, e.g.,
Second Amended Complaint at ¶ 4, but the Court will refer to it
as “Albertelli.” There is no indication in the record that
(continued...)
3
during Plaintiff’s bankruptcy proceedings in the District of
Hawai`i (“Count IV”); [id. at ¶¶ 91-111;] violation of the
California Unfair Competition Law, Business and Professions Code
§ 17200, et seq., and other Hawai`i and California consumer
protection laws, against the Bank Defendants and Alaw
(“Count V”); [id. at ¶¶ 112-18;] a claim against the Bank
Defendants seeking to set aside or vacate the sale of his home
and to have title restored to him (“Count VI”); [id. at ¶¶ 11926;] and intentional infliction of emotional distress against all
of the defendants (“Count VII”), [id. at ¶¶ 127-42].
This Court granted the Bank Motion and the Brignac
Motion insofar as the First Amended Complaint was dismissed for
lack of jurisdiction.
Because this Court concluded that it was
possible for Plaintiff to cure the jurisdictional defect, this
Court also addressed whether amendment of Plaintiff’s claims
would be futile because they were time-barred.
2017 WL 4392040, at *4.
9/29/17 Order,
Specifically, this Court ruled as
follows:
-California law applied to Counts I and III, and the claims could
be amended to allege a basis for tolling of the statute of
limitations; id. at *5-6;
-California law applied to Count II; id. at *5; and the dismissal
of Count II had to be with prejudice because the claim was
time-barred; id. at *7;
3
(...continued)
Plaintiff has completed service on Albertelli.
4
-Hawai`i law applied to Count IV; id. at *5; and the claim was
not time-barred; id. at *8;
-Count V was “liberally construed to allege both that the
challenged conduct which occurred in California violated
California consumer protection laws and the challenged
conduct which occurred in Hawai`i violated Hawai`i consumer
protection laws”; id. at *5; Plaintiff’s Haw. Rev. Stat.
Chapter 480 claims would be timely if he cured the
jurisdictional defect; id. at *8; and Plaintiff’s Cal. Bus.
& Prof. Code § 17200 claims could be amended to allege a
basis for tolling of the statute of limitations; id.;
-California law applied to Count VI; id. at *5; and the claim
could be amended to allege a basis for tolling of the
statute of limitations; id. at *9; and
-California law applied to Count VII; id. at *5; and the claim
could be amended to allege a factual basis for a ruing that
the claim “did not accrue until [Plaintiff] knew or should
have known that his emotional distress was caused by
defendants’ outrageous conduct,” id. at *10 (emphasis in
original).
This Court also dismissed Plaintiff’s claims in Counts I and VII
against Brignac – the only claims against her – with prejudice
because, even if Plaintiff could cure the jurisdictional defect,
he could not cure the substantive defects in his claims against
her.
Id. at *11.
The Clerk’s Office was directed to terminate
Brignac as a party unless Plaintiff filed a motion for
reconsideration of the 9/29/17 Order.
Id. at *12.
Plaintiff did
not file a motion for reconsideration, and Brignac was terminated
as a party on October 20, 2017.
Because Counts I and III through VII were dismissed
without prejudice as to the Bank Defendants, Plaintiff was
5
allowed to file a motion seeking leave to file a second amended
complaint.
Id.
On January 8, 2018, Plaintiff’s counsel filed his
notice of appearance, and Plaintiff filed his Motion for Leave to
File Second Amended Complaint (“Motion for Leave”) on January 11,
2018.
[Dkt. nos. 48, 49.]
The magistrate judge orally granted
the Motion for Leave at the hearing on the motion.4
filed 2/26/18 (dkt. no. 57).]
Complaint on March 5, 2018.
[Minutes,
Plaintiff filed his Second Amended
[Dkt. no. 58.]
The Second Amended Complaint names JPMorgan, CRC,
Albertelli, and U.S. Bank as defendants.
[Id. at ¶¶ 3-5.]
Although Wells Fargo is listed among the Moving Defendants, Wells
Fargo is not named as a defendant in the Second Amended
Complaint.
See id. at ¶ 17 (“In October, 2008, Wachovia Bank
merged into Wells Fargo Bank N.A.”); id. at ¶ 5 (naming U.S. Bank
as a defendant in its capacity as “successor in interest to
Wachovia Bank, N.A. as trustee” (“Wachovia”) (emphasis omitted)).
All subsequent references to the “Moving Defendants” will refer
to only JPMorgan, CRC, and U.S. Bank.
The Moving Defendants and
Albertelli will be referred to collectively as “Defendants.”
Jurisdiction is based on diversity.
[Id. at ¶ 7.]
Plaintiff is a Hawai`i citizen; JPMorgan is a national
4
On March 5, 2018, the magistrate judge filed a written
order granting the Motion for Leave. [Dkt. no. 59.]
6
association with its main office in New York; U.S. Bank is a
national association with its main office in Minnesota;
Albertelli is a Florida limited liability company with its main
office in Florida; and Plaintiff does not give citizenship
information regarding CRC.
[Id. at ¶¶ 1, 3-5.]
However, there
is nothing in the Second Amended Complaint which suggests that
CRC may be considered a Hawai`i citizen for diversity purposes.
According to the Second Amended Complaint, on April 7,
2005, Plaintiff obtained a $417,000 loan from Washington Mutual
Bank, FA (“WaMu”).
In connection with the loan, he executed: a
Fixed/Adjustable Rate Note (“Note”); and a Deed of Trust for the
Property in favor of WaMu, with CRC as the trustee.
The Deed of
Trust gave CRC the power to sell the Property if Plaintiff
committed a material default.
[Id. at ¶¶ 9-12.]
Plaintiff
alleges that, on or about September 25, 2008, JPMorgan obtained
the majority of WaMu’s residential mortgage loans.
¶ 16.]
[Id. at
According to Plaintiff, however, WaMu’s receiver did not
assign Plaintiff’s Deed of Trust to U.S. Bank until on or about
March 19, 2013, and Albertelli purchased CRC’s assets from
JPMorgan in December 2013.
[Id. at ¶¶ 27, 30.]
From February to May 2009, Plaintiff received letters
from JPMorgan that advised him to apply for a loan modification,
and Plaintiff entered into the TPP with JPMorgan, on or about
September 17, 2009.
Plaintiff alleges JPMorgan made false
7
representations about its interest in Plaintiff’s loan and its
authority to negotiate a loan modification during Plaintiff’s
application process and in connection with the TPP.
In June
2010, JPMorgan informed Plaintiff he did not qualify for a
permanent loan modification.
[Id. at ¶¶ 18-21.]
On or about September 1, 2010, CRC recorded and sent
Plaintiff a notice that his loan was in default and that it
intended to sell the Property if he did not cure the default
(“Trustee’s Notice”).
Plaintiff alleges the Trustee’s Notice was
wrongful because, at that time, it was Wachovia that held the
Note and was the assignee of the Deed of Trust.
23.]
[Id. at ¶¶ 22-
On September 10, 2010, Plaintiff filed a wrongful
foreclosure action in a the United States District Court for the
Southern District of California against, inter alia, JPMorgan and
CRC (“California Case”).
According to Plaintiff, during the
California Case, JPMorgan falsely represented that it had a valid
interest in Plaintiff’s Note and mortgage.
[Id. at ¶¶ 24-25.]
On January 30, 2013, Plaintiff filed Chapter 13
bankruptcy proceedings in the United States Bankruptcy Court for
the District of Hawai`i (“Bankruptcy Case”).
[Id. at ¶ 26.]
Plaintiff alleges that, during the Bankruptcy Case, U.S. Bank
falsely represented it was the holder of the Note and was the
assignee of the Deed of Trust, and JPMorgan falsely represented
that it was the loan servicer of Plaintiff’s loan.
8
[Id. at
¶¶ 28-29.]
Plaintiff further alleges that, because of these
false representations, JPMorgan and U.S. Bank (by and through CRC
and/or Albertelli) obtained relief from the automatic bankruptcy
stay in 2015 and were able to complete a nonjudicial foreclosure
of the Property.
[Id. at ¶ 31.]
“After the foreclosure sale was
completed, Plaintiff discovered there was a fatal break in the
chain of title to the mortgage and that Defendants JPMorgan and
U.S. Bank made material misrepresentations to the Bankruptcy
Court as to their claimed interest in and to the Property.”
[Id.
at ¶ 32.]
The Second Amended Complaint alleges the following
claims: intentional and/or negligent misrepresentation against
all Defendants (“Amended Count I”); intentional and/or negligent
misrepresentation to the court against JPMorgan and U.S. Bank
(“Amended Count II”);5 unclean hands against all Defendants
(“Amended Count III”); a claim against all Defendants for breach
of Cal. Bus. & Prof. Code § 17200 and Haw. Rev. Stat. Chapter 480
(“Amended Count IV”); wrongful foreclosure against all Defendants
(“Amended Count V”); intentional and/or negligent infliction of
emotional distress against all Defendants (“Amended Count VI”);
slander of title against all Defendants (“Amended Count VII”); a
5
The heading of Amended Count II states the claim is
against WaMu and JPMorgan, but that appears to be a typographic
error, because the text of Amended Count II refers to JPMorgan
and U.S. Bank. [Second Amended Complaint at pgs. 9-10.]
9
declaratory judgment claim against all Defendants (“Amended
Count VIII”); and a claim for an equitable lien against all
Defendants (“Amended Count XI”).
The instant Motion seeks dismissal, with prejudice, of
all claims in the Second Amended Complaint.
The Moving
Defendants argue: 1) Plaintiff’s claims are barred under the res
judicata doctrine; and 2) it is not possible for Plaintiff to
state any plausible claim for relief based on the theories
asserted in the Second Amended Complaint, which were considered
and rejected in the California Case and the Bankruptcy Case.
DISCUSSION
I.
Materials Beyond the Pleadings
The Motion includes: the docket sheets for the
California Case and the Bankruptcy Case; [Motion, Decl. of
J. Blaine Rogers (“Rogers Decl.”), Exhs. A & B;] Debtors Samuel
St. James and Ma. Charito Cudillo St. James’s objections to the
motion for relief from the automatic stay, filed on July 17, 2013
in the Bankruptcy Case; [id., Exh. C;] the bankruptcy court’s
March 5, 2014 decision on Plaintiff’s motion for a stay pending
his appeal of the order granting relief from the automatic stay,
and this Court’s June 13, 2014 order dismissing Plaintiff’s
appeal for failure to prosecute; [id., Exhs. D & E;] Plaintiff’s
Note; [id., Exh. F;] and an affidavit, recorded on October 6,
2008 in the Town of West Hartford, regarding the acquisition of
10
assets by U.S. Bank from Wachovia, [id., Exh. G; Rogers Decl. at
¶ 9].
The Moving Defendants argue this Court should take
judicial notice of Exhibits A, B, C, D, E, and G pursuant to Fed.
R. Evid. 201(b)(2) and (c)(2).
n.5, 12 n.7, 15 n.11.]
[Mem. in Supp. of Motion at 4
Further, the Moving Defendants argue
Exhibit F is incorporated by reference in the Second Amended
Complaint.
[Id. at 14 n.9.]
As a general rule, this Court’s scope of review in
considering a motion to dismiss is limited to the allegations in
the complaint.
See Daniels-Hall v. Nat’l Educ. Ass’n, 629 F.3d
992, 998 (9th Cir. 2010).
“However, courts may ‘consider certain
materials – documents attached to the complaint, documents
incorporated by reference in the complaint, or matters of
judicial notice – without converting the motion to dismiss into a
motion for summary judgment.’”
Haw. Reg’l Council of Carpenters
v. Yoshimura, Civ. No. 16-00198 ACK-KSC, 2016 WL 4745169, at *2
(D. Hawai`i Sept. 12, 2016) (quoting United States v. Ritchie,
342 F.3d 903, 908 (9th Cir. 2003)).
This Court “may take judicial notice of court filings
and other matters of public record.”
Reyn’s Pasta Bella, LLC v.
Visa USA, Inc., 442 F.3d 741, 746 n.6 (9th Cir. 2006); see also
Fed. R. Evid. 201(b) (“The court may judicially notice a fact
that is not subject to reasonable dispute because it: . . .
(2) can be accurately and readily determined from sources whose
11
accuracy cannot reasonably be questioned.”).
In considering a
motion to dismiss, this Court will only consider the fact that
certain documents were filed, not the contents of those
documents.
See, e.g., Hirota v. Gen. Nutrition Corp.,
CIVIL 15-00191 LEK-KSC, 2015 WL 6673688, at *2–3 (D. Hawai`i
Oct. 29, 2015) (noting that this Court could take judicial notice
of the docket in the plaintiffs’ bankruptcy proceedings and the
filing of specific documents, but converting the motion to
dismiss into a motion for summary judgment because “it [was]
necessary to consider the contents of the [plaintiffs’] filings
in the Bankruptcy Court, not only the Bankruptcy Court’s rulings
or the fact that the [plaintiffs] filed certain documents”).
The Moving Defendants’ request for judicial notice of
Exhibits A, B, C, D, E, and G is GRANTED, but this Court will
only consider the fact that those documents – or, as to the
docket sheets, the documents listed therein – were filed.
Court will not consider contents of those documents.
This
Similarly,
this Court can consider the Note (Exhibit F) because the Note is
incorporated by reference in the Second Amended Complaint.
e.g., Second Amended Complaint at ¶ 10.
See,
However, this is not
dispositive of what entity controlled the Note at certain
specific times relevant to Plaintiff’s claims.
The Court’s consideration of these exhibits does not
convert the instant Motion into a motion for summary judgment.
12
See Yoshimura, 2016 WL 4745169, at *2.
The Court now turns to
the merits of the Motion.
II.
Law of the Case Doctrine
Plaintiff argues that: the Moving Defendants raised the
same arguments it now raises in the instant Motion in their
opposition to Plaintiff’s Motion for Leave; the magistrate judge
rejected these arguments when he granted the Motion for Leave;
and the magistrate judge’s rulings constitute the law of the case
and should not be revisited by this Court.
“The law-of-the-case doctrine generally
provides that ‘when a court decides upon a rule of
law, that decision should continue to govern the
same issues in subsequent stages in the same
case.’” Musacchio v. United States, --- U.S.
----, 136 S. Ct. 709, 716, 193 L. Ed. 2d 639
(2016) (quoting Pepper v. United States, 562 U.S.
476, 506, 131 S. Ct. 1229, 179 L. Ed. 2d 196
(2011)). The district court determined that it
was “precluded” from reconsidering its order
dismissing the original First Amendment claims in
adjudicating the motion to dismiss the amended
First Amendment claims, absent a showing that
“1) the first decision was clearly erroneous;
2) an intervening change in the law has occurred;
3) the evidence on remand is substantially
different; 4) other changed circumstances exist;
or 5) a manifest injustice would otherwise
result.” United States v. Cuddy, 147 F.3d 1111,
1114 (9th Cir. 1998). . . .
The law of the case doctrine does not
preclude a court from reassessing its own legal
rulings in the same case. The doctrine applies
most clearly where an issue has been decided by a
higher court; in that case, the lower court is
precluded from reconsidering the issue and abuses
its discretion in doing so except in the limited
circumstances the district court identified. See,
e.g., Cuddy, 147 F.3d at 1114; United States v.
13
Miller, 822 F.2d 828, 832 (9th Cir. 1987) (“The
rule is that the mandate of an appeals court
precludes the district court on remand from
reconsidering matters which were either expressly
or implicitly disposed of upon appeal.”); United
States v. Houser, 804 F.2d 565, 567 (9th Cir.
1986) (“The legal effect of the doctrine of the
law of the case depends upon whether the earlier
ruling was made by a trial court or an appellate
court. . . . A trial court may not, however,
reconsider a question decided by an appellate
court.”).
Askins v. U.S. Dep’t of Homeland Sec., 899 F.3d 1035, 1042 (9th
Cir. 2018) (some alterations in Askins) (some emphasis added).
Thus, the law of the case doctrine does not preclude this Court
from reassessing the magistrate judge’s rulings on the arguments
that were presented in both the opposition to the Motion for
Leave and the instant Motion.
Moreover, this Court notes that the standard applicable
to a court’s consideration of a plaintiff’s motion for leave to
file an amended complaint is governed by Fed. R. Civ.
P. 15(a)(2), which states, in pertinent part: “The court should
freely give leave when justice so requires.”
This district court
has stated:
“This policy is ‘to be applied with extreme
liberality.’” Eminence Capital, LLC v. Aspeon,
Inc., 316 F.3d 1048, 1051 (9th Cir. 2003)
(citations omitted). The determination whether a
party should be allowed to amend a pleading is
left to the discretion of the court. Zenith Radio
Corp. v. Hazeltine Research, Inc., 401 U.S. 321,
330 (1971) (citation omitted). If the facts or
circumstances a plaintiff relies upon may be the
basis of relief, she should be afforded an
opportunity to test her claim on the merits.
14
Foman v. Davis, 371 U.S. 178, 182 (1962).
Furthermore, in exercising its discretion to grant
leave to amend, a court “‘should be guided by the
underlying purpose of Rule 15(a) . . . which was
to facilitate decisions on the merits, rather than
on technicalities or pleadings.’” In re Morris,
363 F.3d 891, 894 (9th Cir. 2004) (quoting James
v. Pliler, 269 F.3d 1124, 1126 (9th Cir. 2001))
(alteration in original).
Bald v. Wells Fargo Bank, N.A., CIVIL NO. 13-00135 SOM-KSC, 2017
WL 5617061, at *1 (D. Hawai`i Nov. 20, 2017).
“[F]utility of the
amendment” is one of the factors that can be considered in this
analysis.
Id. at *2 (citing Foman, 371 U.S. at 182; Morris, 363
F.3d at 894).
However, even though futility may be considered,
the Rule 15(a)(2) standard is far less stringent than the
standard applicable to this Court’s consideration of a motion to
dismiss.
See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (“To
survive a motion to dismiss, a complaint must contain sufficient
factual matter, accepted as true, to ‘state a claim to relief
that is plausible on its face.’” (quoting Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 570 (2007))); id. (“A claim has facial
plausibility when the plaintiff pleads factual content that
allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.” (citing Twombly,
550 U.S. at 556)).
This Court therefore rejects Plaintiff’s argument that
the law of the case doctrine precludes this Court from
considering the arguments raised in the Motion.
15
III. Res Judicata
The Moving Defendants argue the res judicata effect of
the California Case and the Bankruptcy Case preclude Plaintiff’s
claims in the instant case, in particular because Plaintiff is
attempting to re-litigate the argument – which the bankruptcy
court rejected in a final, appealable order – that U.S. Bank
lacked standing to conduct the foreclosure.
The following standards apply to the issue of whether
the judgment in the California Case has a res judicata effect:
Federal courts are required to give full
faith and credit to state court judgments under 28
U.S.C. § 1738. See San Remo Hotel, L.P. v. City &
County of San Francisco, 545 U.S. 323, 125 S. Ct.
2491, 162 L. Ed. 2d 315 (2005). Generally
“[u]nder res judicata, a final judgment on the
merits of an action precludes the parties or their
privies from relitigating issues that were or
could have been raised in that action.” Allen v.
McCurry, 449 U.S. 90, 94, 101 S. Ct. 411, 66 L.
Ed. 2d 308 (1980). To determine the preclusive
effect of a state court judgment federal courts
look to state law. Palomar Mobilehome Park Ass’n
v. City of San Marcos, 989 F.2d 362, 364 (9th Cir.
1993). California’s res judicata doctrine is
based on a primary rights theory. The California
Supreme Court explained that the primary rights
theory:
[P]rovides that a “cause of action” is
comprised of a “primary right” of the
plaintiff, a corresponding “primary duty” of
the defendant, and a wrongful act by the
defendant constituting a breach of that duty.
The most salient characteristic of a primary
right is that it is indivisible: the
violation of a single primary right gives
rise to but a single cause of action.
16
Mycogen Corp. v. Monsanto Co., 28 Cal. 4th 888,
904, 123 Cal. Rptr. 2d 432, 443, 51 P.3d 297, 306
(2002) (citations omitted). A party may bring
only one cause of action to vindicate a primary
right. Id. at 897, 123 Cal. Rptr. 2d at 438, 51
P.3d at 302. Claims not raised in this single
cause of action may not be raised at a later date.
Id.
Manufactured Home Cmtys. Inc. v. City of San Jose, 420 F.3d 1022,
1031 (9th Cir. 2005) (alterations in Manufactured Home) (footnote
omitted).
The Moving Defendants point out that the defendants in
the California Case filed a motion to dismiss, which was granted
on December 21, 2010.
California Case.
Plaintiff did not take an appeal in the
[Mem. in Supp. of Motion at 3 (citing Rogers
Decl., Exh. A (docket sheet for California Case, printed on
10/21/16)).]
The district court in the California Case dismissed
Plaintiff’s Truth in Lending Act and Real Estate Settlement
Procedure’s Act claims with prejudice and dismissed Plaintiff’s
state law claims without prejudice.
[Rogers Decl., Exh. A at
dkt. no. 15 (entry for order granting motion to dismiss).]
This
Court cannot determine, based upon the docket sheet of the
California Case, whether any of the claims Plaintiff now brings
in the instant case constitute the same cause of action as claims
brought in the California Case.
Rptr. 2d at 438.
See Mycogen Corp., 123 Cal.
Therefore, to the extent the Motion seeks
dismissal based on the res judicata effect of the judgment in the
California Case, the Motion is denied.
17
The following standard applies to the issue of whether
the judgment in the Bankruptcy Case has a res judicata effect:
We steadfastly protect a litigant’s right to his
day in court. Once a sophisticated party has had
a full and fair opportunity to be heard, however,
we also recognize the merits of finality:
The doctrine of res judicata provides that ‘a
final judgment on the merits bars further
claims by parties or their privies based on
the same cause of action.’ The application
of this doctrine is ‘central to the purpose
for which civil courts have been established,
the conclusive resolution of disputes within
their jurisdiction.’ Moreover, a rule
precluding parties from the contestation of
matters already fully and fairly litigated
‘conserves judicial resources’ and ‘fosters
reliance on judicial action by minimizing the
possibility of inconsistent decisions.’
In re Schimmels, 127 F.3d 875, 881 (9th Cir. 1997)
(quoting Montana v. United States, 440 U.S. 147,
153-54, 99 S. Ct. 970, 59 L. Ed. 2d 210 (1979));
see also Bell v. United States, 2002 WL 1987395,
at *4 (E.D. Cal. 2002) (“The doctrine of res
judicata is meant to protect parties against being
harassed by repetitive actions.”); Clements v.
Airport Auth., 69 F.3d 321, 330 (9th Cir. 1995)
(“Preclusion doctrine encompasses vindication of
both public and private interests. The private
values protected include shielding litigants from
the burden of re-litigating identical issues with
the same party, and vindicating private parties’
interest in repose. The public interests served
include avoiding inconsistent results and
preserving judicial economy.”).
Three elements constitute a successful res
judicata defense. “Res judicata is applicable
whenever there is (1) an identity of claims, (2) a
final judgment on the merits, and (3) privity
between parties.” Stratosphere Litig. L.L.C. v.
Grand Casinos, Inc., 298 F.3d 1137, 1143 n.3 (9th
Cir. 2002) (citing Owens v. Kaiser Found. Health
Plan, Inc., 244 F.3d 708, 713 (9th Cir. 2001)).
18
Tahoe-Sierra Pres. Council, Inc. v. Tahoe Reg’l Planning Agency,
322 F.3d 1064, 1077 (9th Cir. 2003) (footnote omitted).
In order
to accept the Moving Defendants’ position that certain rulings in
the Bankruptcy Action have a res judicata effect, this Court
would be required to consider more than the mere fact that the
court documents attached to the Motion were filed.
This Court
would have to consider the contents of those documents, as well
as various representations purportedly made in the Bankruptcy
Case.
This would go beyond the scope of judicially noticed
documents that are considered in ruling on a motion to dismiss.
See Hirota, 2015 WL 6673688, at *2-3.
This Court therefore
concludes that it cannot determine the res judicata effect of the
Bankruptcy Case based upon the limited record currently before
this Court.
To the extent the Motion seeks dismissal of Plaintiff’s
claims based on the res judicata doctrine, the Motion is denied.
However, the denial is without prejudice to the presentation of
the res judicata issues in a motion for summary judgment.
IV.
Plausibility of Plaintiff’s Claims
The Moving Defendants’ argument that the Second Amended
Complaint fails to state any plausible claims for relief also
asks this Court to consider the contents of documents filed, and
representations made, in the prior proceedings.
In ruling upon
the instant Motion, this Court must accept all of the factual
19
allegations of the Second Amended Complaint as true, but it does
not accept the legal conclusions pled within the factual
allegations.
See Iqbal, 556 U.S. at 678 (“Although for the
purposes of a motion to dismiss we must take all of the factual
allegations in the complaint as true, we ‘are not bound to accept
as true a legal conclusion couched as a factual allegation.’”
(quoting Twombly, 550 U.S. at 555)).
So construed, Plaintiff’s
Second Amended Complaint states sufficient factual allegations to
support a reasonable inference that the Moving Defendants are
liable for the misconduct alleged.
See id.
This Court therefore
concludes Plaintiff’s Second Amended Complaint alleges plausible
claims for relief and denies the Motion.
However, the denial of
the Motion is without prejudice to the Moving Defendants’ ability
to raise similar arguments in a motion for summary judgment.
CONCLUSION
On the basis of the foregoing, JPMorgan, Wells Fargo,
CRC, and U.S. Bank’s Motion to Dismiss [Dkt. No. 58] Plaintiff
Samuel St. James’s Second Amended Complaint, filed May 25, 2018,
is HEREBY DENIED.
The Moving Defendants are ORDERED to file
their answer to Plaintiff’s Second Amended Complaint by
November 21, 2018.
If the Moving Defendants file a motion for
reconsideration of the instant Order, it will not affect their
deadline to file their answer.
If necessary in light of any
rulings on a motion for reconsideration, this Court will allow
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the Moving Defendants to file an amended answer to the Second
Amended Complaint.
The Clerk’s Office is DIRECTED to terminate Defendants
Washington Mutual Bank, FSB, Washington Mutual Holding Inc., and
Wells Fargo Bank, N.A. because they are not named as parties in
the Second Amended Complaint.
IT IS SO ORDERED.
DATED AT HONOLULU, HAWAII, October 31, 2018.
/s/ Leslie E. Kobayashi
Leslie E. Kobayashi
United States District Judge
SAMUEL ST. JAMES VS. JP MORGAN CHASE BANK CORP., ET AL; CIVIL 1600529 LEK-KSC; ORDER DENYING MOTION TO DISMISS [DKT. NO. 58]
PLAINTIFF SAMUEL ST. JAMES’S SECOND AMENDED COMPLAINT
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