Breinholt et al v. Ocwen Loan Services, LLC et al
MEMORANDUM DECISION AND ORDER RE: PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTION AND PLAINTIFF'S MOTION TO STRIKE DEFENDANT'S REQUEST TO TAKE JUDICIAL NOTICE FOR LACK OF RELEVANCY. IT IS HEREBY ORDERED that Plaintiff's Motion for P reliminary Injunction (Docket No. 4 ) is DENIED AS MOOT; and Plaintiff's Motion to Strike Defendant's Request to Take Judicial Notice for Lack of Relevancy (Docket No. 17 ) is DENIED. Signed by Judge Ronald E. Bush. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (km)
UNITED STATES DISTRICT COURT
DISTRICT OF IDAHO
RICHARD WILLIAM BREINHOLT AND
SUSAN LYN BREINHOLT
OCWEN LOAN SERVICES, LLC, A FINANCIAL
INSTITUTION UNREGISTERED IN IDAHO;
UNKNOWN OCWEN AGENTS AND
COUNSELS JOHN AND JANE DOES I-XX;
Case No.: 1:16-CV-00455-EJL-REB
REPORT AND RECOMMENDATION
DEFENDANT’S MOTION TO
(Docket No. 13)
MEMORANDUM DECISION AND
PLAINTIFFS’ MOTION FOR
(Docket No. 4)
PLAINTIFFS’ MOTION TO STRIKE
DEFENDANT’S REQUEST TO TAKE
JUDICIAL NOTICE FOR LACK OF
(Docket No. 17)
Now pending before the Court are the following motions: (1) Defendant’s Motion to
Dismiss (Docket No. 13); (2) Plaintiffs’ Motion for Preliminary Injunction (Docket No. 4); and
(3) Plaintiffs’ Motion to Strike Defendant’s Request to Take Judicial Notice for Lack of
Relevancy (Docket No. 17). Having carefully considered the record and otherwise being fully
advised, the undersigned enters the following Report and Recommendation as to Defendant’s
Motion to Dismiss, and Memorandum Decision and Order as to Plaintiffs’ Motion for
Preliminary Injunction and Motion to Strike:
REPORT AND RECOMMENDATION / DECISION AND ORDER - 1
On or around August 30, 2005, in consideration for a mortgage loan, Plaintiffs
Richard William Breinholt and Susan Lyn Breinholt (“Breinholts” or “Plaintiffs”) executed a
promissory note (“Note”). The Note was secured by a Deed of Trust on the real property located
at 1976 East Star Lane, Meridian, Idaho 83642 (“Property”). Plaintiffs defaulted on their Note
and Deed of Trust, and the Property was subsequently sold at a non-judicial foreclosure sale on
or about May 21, 2009. See Tait Aff. at ¶¶ 2-3, attached as Ex. A to Request for Judicial Notice
(“RFJN”) (Docket No. 11, Att. 1).2
On June 17, 2009, Plaintiffs (represented by an attorney) brought suit in Idaho
state court, contesting the validity of the non-judicial foreclosure (“2009 State Court Action”).3
There are many moving parts leading up to this point in this case. This Report and
Recommendation/Memorandum Decision and Order highlights the salient factual backdrop in
paragraph format, organized more-or-less chronologically. However, in certain instances, events
are listed out of chronological order and mentioned in the context of the matter discussed at that
time so as to avoid confusion.
The exhibits attached to Defendant’s Request for Judicial Notice (Exhibits A-J) are all
matters of public record filed with either the (1) the District Court of the Fourth Judicial District
of the State of Idaho, in and for the County of Ada, (2) the United States District Court of the
State of Idaho, or (3) the United States Court of Appeals, Ninth Circuit. “Documents on file
with other courts and county recorders’ offices are routinely subject to judicial notice” and do
not convert a motion to dismiss into a motion for summary judgment. Ridenour v. Bank of
America, N.A., 23 F. Supp. 3d 1201, 1204 (D. Idaho 2014) (citing Harris v. Cnty. of Orange, 682
F.3d 1126, 1131-32 (9th Cir. 2012)); see also Fed. R. Evid. 201(b)(c). Therefore, Defendant’s
Request for Judicial Notice (Docket No. 11) is granted, while Plaintiffs’ Motion to Strike
Defendant’s Request to Take Judicial Notice for Lack of Relevancy (Docket No. 17) is denied.
Plaintiffs’ claims in the 2009 State Court Action included: Declaratory Judgment: No
Foreclosure Sale (Count One); Breach of Trustee’s Duties (Count Two); Forgery (Count Three);
Fraud (Count Four); Theft (Count Five); Civil Conspiracy (Count Six); and Promissory and
Equitable Estoppel (Count Seven). See Compl, attached as Ex. B to RFJN (Docket No. 11, Att.
2). Ultimately, Plaintiffs requested “[t]hat the Court award Plaintiffs the declaratory and
injunctive relive sought herein . . . .” Id.
REPORT AND RECOMMENDATION / DECISION AND ORDER - 2
Pursuant to a September 13, 2010 stipulation, the 2009 State Court Action was ultimately
dismissed with prejudice on or around October 5, 2010. See Order of Dismissal with Prejudice,
attached as Ex. B to RFJN (Docket No. 11, Att. 2).
On September 10, 2010, Plaintiffs (now representing themselves) filed a similar
action in this Court, also contesting the validity of the non-judicial foreclosure (“2010 Federal
Action”).4 On February 18, 2011, U.S. District Judge Edward J. Lodge5 dismissed the 2010
Federal Action based, primarily, on the doctrine of res judicata. See 2/18/11 MDO, p. 7,
attached as Ex. D to RFJN (Docket No. 11, Att. 4) (“The Court finds the three requirements of
Plaintiffs’ Complaint in the 2010 Federal Action is nearly incomprehensible. See
Compl., attached as Ex. C to RFJN (Docket No. 11, Att. 3). Attempting
to make sense of it, Judge Lodge described Plaintiffs’ claims as follows:
The Breinholts filed this action as pro se litigants. The Complaint alleges subject
matter jurisdiction over the Truth in Lending Act (“TILA), Real Estate Settlement
Procedures Act (“RESPA”), 12 U.S.C. § 38A and federal foreclosure law. Plaintiff
demands Defendant (but does not identify which defendant) to surrender the
instrument related to the foreclosure action. It appears that Plaintiffs want
Defendants to produce the original promissory note, mortgage and other loan
documents related to the real property located at 1976 E. Star Lane, Meridian, Idaho.
Plaintiffs appear to object to Defendants proceeding with non-judicial foreclosure
without proving they are the true creditor and real party in interest. Plaintiffs allege
Defendants (not certain which defendants) have committed fraud in their dealings
with Plaintiff. Plaintiff seeks a temporary restraining order to stop foreclosure
proceedings and request clear title to their home and $25,000 in legal fees, and over
$10,000,000 in Truth in Lending violations.
2/18/11 MDO, p. 2, attached as Ex. D to RFJN (Docket No. 11, Att. 4).
Presumably due to Judge Lodge’s involvement in the 2010 Federal Action, Plaintiffs
moved to disqualify Judge Lodge in this action. See Mot. to Disqualify (Docket No. 24); see
also Decl. in Supp. of Mot. to Disqualify, ¶¶ 3-6 (Docket No. 24, Att. 1) (“Plaintiffs file a
previous case 10-466-CV-MHW in which the subject house is the matter of the action. The
honorable Judge Lodge presided on the case. The subject case is under appeal and is currently
before the 9th circuit Court of appeals. The proceedings of the case is an obvious conflict of
interest which would prejudice this case 1:16 cv 455 REB.”). On May 23, 2017, Judge Lodge
denied Plaintiffs’ request that he be disqualified. See 5/23/17 Order (Docket No. 27).
REPORT AND RECOMMENDATION / DECISION AND ORDER - 3
res judicata are satisfied in this action: party identity, identity of issues, and a final judgment.
Any new allegations or claims of recovery could have and should have been raised by Plaintiffs
in their state court action [(the 2009 State Court Action)].”) (internal citations omitted). Judge
Lodge also dismissed Plaintiffs’ TILA claims as barred by the applicable statute of limitations,
and dismissed Plaintiffs’ fraud, breach of fiduciary duty, and Fair Dept Collection Practices Act
(“FDCPA”) claims because the Plaintiffs’ default on the underlying Note was undisputed. See
id. (“Further, any claims pursuant to TILA are barred by the applicable statute of limitations. As
to any claims in the Complaint for fraud, breach of fiduciary duty, or violation of Fair Debt
Collections Act, the Court finds Plaintiffs have not provided legal authority to be able to recover
on these claims since the TILA claims are time barred and the Breinholts’ default on the
underlying note for the Star Lane property is undisputed.”) (internal citation omitted).6
The Trustee’s Deed on the Property was recorded on April 11, 2011 in the Ada
County Recorder’s Office. See Tait Aff. at ¶ 4, attached as Ex. A to RFJN (Docket No. 11, Att.
1). A Notice to Quit was served on Plaintiffs on May 3, 2011. See id. Because Plaintiffs failed
to vacate the Property within three days as directed in the Notice to Quit, on May 27, 2011,
Deutsche Bank National Trust Company (as Trustee for the Residential Asset Securitization
Trust 2005-A15, Mortgage Pass-Through Certificates, Series 2005-O Under the Pooling and
Servicing Agreement Dated December 1, 2005) (“Trust”) brought a civil action in Idaho state
Judge Lodge issued a similar order on August 12, 2011, dismissing a different set of
defendants from the 2010 Federal Action. See 8/12/11 Order, Case No. 1:10-cv-00466-EJL
(Docket No. 52). On July 11, 2012, Judge Lodge issued another, similar order, dismissing a
different defendant from the 2010 Federal Action. See 7/11/12 Order, Case No. 1:10-cv-00466EJL (Docket No. 70). Also on July 11, 2012, Judge Lodge entered a Judgment, ordering that
“Plaintiffs take nothing from the Defendants and this case is DISMISSED IN ITS ENTIRETY.”
7/11/12 J., Case No. 1:10-cv-00466-EJL (Docket No. 71) (emphasis in original).
REPORT AND RECOMMENDATION / DECISION AND ORDER - 4
court to evict Plaintiffs from the Property (“2011 Eviction Action”).7 See id. at ¶¶ 4-5; see also
Docket for Case No. CV-OC-2011-10414, attached as Ex. E to RFJN (Docket No. 11, Att. 5).
On November 29, 2011, Fourth Judicial District Magistrate Judge Christopher Bieter granted the
Trust’s Motion for Summary Judgment in the state court 2011 Eviction Action, and later entered
a Judgment and Order of Eviction on October 1, 2012. See Tait Aff. at ¶ 6, attached as Ex. A to
RFJN (Docket No. 11, Att. 1) (citing to 10/1/12 J. and Order, attached as Ex. B thereto).
Plaintiffs appealed Judge Bieter’s decision to the state district court and, on
October 1, 2012, filed a Notice of Lis Pendens. See id. at ¶ 7.8 On February 13, 2012, District
Judge Kathryn A. Sticklin of the state court upheld Judge Bieter’s Judgment and Order of
Eviction. See id. (citing to 2/13/12 Mem. Dec. and Order, attached as Ex. D thereto) (though
striking Plaintiffs’ brief, concluding nonetheless: “The magistrate did not err in concluding that
the Breinholts are barred by the doctrine of res judicata from relitigating their claims in this case.
As noted by [(the Trust)], ‘[i]n the related state court [(2009 State Court Action)] and federal
court [(2010 Federal Action)] actions, the Breinholts asserted claims that are identical to the
arguments and/or claims raised in their Answer to [(the Trust’s)] Complaint [in this case [(2011
Eviction Action)]] and again raised here on appeal. The courts have dismissed all of the claims
contained in the prior actions with prejudice.’”)).
On August 8, 2012, Plaintiffs filed a Notice of Appeal with the Ninth Circuit
Court of Appeals, appealing the 2010 Federal Action. See Not. of Appeal, attached as Ex. H to
As would be obvious, the Breinholts were actually the defendants in the 2011 Eviction
Action, for ease of reference and continuity’s sake, the undersigned will continue to identify the
Breinholts simply as “Plaintiffs” throughout.
On January 30, 2012, execution on Judge Bieter’s October 1, 2012 Judgment and Order
of Eviction was stayed pending resolution in state district court. See Tait Aff. at ¶ 8, attached as
Ex. A to RFJN (Docket No. 11, Att. 1) (citing to 1/30/12 Order, attached as Ex. E thereto).
REPORT AND RECOMMENDATION / DECISION AND ORDER - 5
RFJN (Docket No. 11, Att. 8). On November 7, 2016, the Ninth Circuit affirmed Judge Lodge’s
dismissal of Plaintiffs’ claims in the 2010 Federal Action, reasoning:
The district court properly dismissed the Breinholts’ claims against Aegis Wholesale
Corporation, OneWest Bank, FSB, Tri-County Process Serving LLC . . . , Regional
Trustee Services Corporation, and Pioneer Lender Trustee Services, LLC, as barred
by the doctrine of res judicata because the Breinholts’ claims were raised, or could
have been raised, in a prior state court action between the parties or their privies that
resulted in a final judgment on the merits.
The district court properly dismissed the Breinholts’ claims against Mortgage
Electronic Registration Systems, Inc. . . ., TitleOne Corporation, Jennifer Tait,
and Robinson Tait, P.S. because the Breinholts failed to allege facts sufficient to
state any plausible claim for relief.
11/7/16 Mem., pp. 2-3, attached as Ex. I to RFJN (Docket No. 11, Att. 9).9
In the meantime, Plaintiffs appealed Judge Sticklin’s February 13, 2012 decision
in the 2011 Eviction Action. See Tait Aff. at ¶ 8, attached as Ex. A to RFJN (Docket No. 11,
Att. 1).10, 11 On December 3, 2014 (following the resolution of several procedural/jurisdictional
issues (see id. at ¶¶ 8-11)), the Idaho Court of Appeals affirmed Judge Sticklin’s order affirming
On May 17, 2017, the Ninth Circuit denied Plaintiffs petition for panel rehearing and
petition for rehearing en banc in the 2010 Federal Action. See 5/17/17 Order, Case No. 1:10-cv00466-EJL (Docket No. 77) (“No further filings will be entertained in this closed case.”). On
May 25, 2017, the Ninth Circuit issued a Mandate, stating that “[t]he judgment of this Court,
entered November 7, 2016, takes effect this date” and that “[t]his constitutes the formal mandate
of this Court issued pursuant to Rule 41(a) of the Federal Rules of Appellate Procedure.”
5/25/17 Mandate (Docket No. 78).
On May 15, 2013, Judge Sticklin ordered that the Judgment and Order of Eviction
entered in the 2011 Eviction Action was stayed pending Plaintiffs’ appeal to the Idaho Supreme
Court. See Tait Aff. at ¶ 8, attached as Ex. A to RFJN (Docket No. 11, Att. 1) (citing to 5/15/13
Order, attached as Ex. F thereto).
The four appeal issues were: (1) whether the state district court erred by not
establishing the Trust’s standing; (2) whether the state district court erred by striking Plaintiffs’
appellate brief in their appeal to the state district court; (3) whether the unlawful detainer statute
is unconstitutional, as applied to them; and (4) whether the state district court erred by taking the
averments of the Trust’s counsel as true. See generally Deutsche Bank Nat. Trust Co. v.
Breinholt, 2014 WL 6804502 (Id. Ct. App. 2014).
REPORT AND RECOMMENDATION / DECISION AND ORDER - 6
Judge Bieter’s grant of summary judgment in favor of the Trust. See Deutsche Bank Nat. Trust
Co. v. Breinholt, 2014 WL 6804502 (Id. Ct. App. 2014).
On June 16, 2016, the Trust filed motions in the 2011 Eviction Action to lift the
January 30, 2012 (renewed on May 15, 2013) stay on eviction proceedings, to disburse funds in
the Court’s registry to the Trust, to issue a writ of restitution, and to expunge the Lis Pendens
recorded with the Ada County Recorder. See Mot., attached as Ex. F to RFJN (Docket No. 11,
Att. 6).12 On August 17, 2016, Judge Bieter lifted the May 15, 2013 stay, ordered that all monies
deposited in the Court’s registry be released to the Trust, and that a writ of restitution of
restitution be issued restoring possession of the Property to the Trust. See 8/17/16 Order,
attached as Ex. G to RFJN (Docket No. 11, Att. 7).
On August 25, 2016, Plaintiffs appealed Judge Bieter’s August 17, 2016 order to
the state district court. See Ex. J to RFJN (Docket No. 11, Att. 10).13
On October 11, 2016, Plaintiffs filed the instant action in this Court against
Defendant Ocwen Loan Services, LLC (“Ocwen” or “Defendant”).14 Within their Complaint,
Procedurally speaking, a lot happened between the Court of Appeals of Idaho’s
December 3, 2014 decision and this point in time. On December 24, 2014, Plaintiffs filed a
Motion for Rehearing, which the Idaho Supreme Court denied on January 16, 2015. See Tait
Aff. at ¶ 13, attached as Ex. A to RFJN (Docket No. 11, Att. 1). On January 30, 2015, Plaintiffs
filed a Petition for Review of both the December 3, 2014 decision and the January 16, 2015
order denying Plaintiffs’ Motion for Rehearing, which the Idaho Supreme Court denied on
February 24, 2015. See id. at ¶ 14. On February 25, 2015, the Idaho Supreme Court filed a
Remittitur to the state district court, directing it to comply with the decision. See id. at ¶ 15. On
May 21, 2015, Plaintiffs filed a Petition for Writ of Certiorari with the United States Supreme
Court, which was denied on April 25, 2016. See id. at ¶ 16.
The record now before the Court does not discuss the current status of Plaintiffs’
appeal in this latest regard.
Ocwen notes that it is properly identified as Ocwen Loan Servicing, LLC. See Mem.
in Supp. of MTD, p. 1 (Docket No. 13, Att. 1).
REPORT AND RECOMMENDATION / DECISION AND ORDER - 7
Plaintiffs again generally challenge the validity of the non-judicial foreclosure sale of the
Property, alongside oblique allegations that they have attempted “to bring the house into honor
but that [Ocwen] ha[s] gone through the motions of modifying, not holding the papered sale, and
bad faith bargaining to modify/REO [(real estate owned)]/DPO [(discounted payoff)] only to
have the deal changed time and time again and having the attorneys changed every time the deal
seems to be finalized.” Compl., ¶ 48 (Docket No. 1). Plaintiffs then assert the following claims
against Ocwen: (1) Violations of the Truth in Lending Action (First Cause of Action); (2)
Violations of the Real Estate Settlement Procedures Action (mistakenly identified as the Third
Cause of Action); (3) Violations of the Consumer Protection Act (mistakenly identified as the
Fourth Cause of Action); and (4) Intentional Infliction of Emotional Distress (mistakenly
identified as the Fifth Cause of Action). See id. at ¶¶ 57-72.
In the pending Motion to Dismiss, Ocwen seeks to dismiss each of these claims
and, correspondingly, this action – specifically, Ocwen argues that each of Plaintiffs’ claims (1)
is barred by the doctrine of res judicata or, alternatively, (2) fails as a matter of law. See
generally Mem. in Supp. of MTD (Docket No. 13, Att. 1).
Motion to Dismiss Standard
FRCP 8(a)(2) requires “a short and plain statement of the claim showing that the pleader
is entitled to relief,” in order to give the defendant fair notice of what the . . . claim is and the
grounds upon which it rests.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). While
a complaint attached by an FRCP 12(b)(6) motion to dismiss “does not need detailed factual
allegations,” it must set forth “more than labels and conclusions, and a formulaic recitation of the
elements of a cause of action will not do.” Id. at 555. To survive a motion to dismiss, a
REPORT AND RECOMMENDATION / DECISION AND ORDER - 8
complaint must contain sufficient factual matter, accepted as true, to “state a claim to relief that
is plausible on its face.” Id. at 570. 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. See id. at 556. The plausibility standard is not akin to a “probability
requirement,” but it asks for more than a sheer possibility that a defendant has acted unlawfully.
Id. Where a complaint pleads facts that are “merely consistent with” a defendant’s liability, it
“stops short of the line between possibility and plausibility of ‘entitlement to relief.’” Id. at 557.
The Supreme Court has identified two “working principles” that underlie the decision in
Twombly. See Ashcroft v. Iqbal, 556 U.S. 662, 663 (2009). First, the tenet that a court must
accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions.
See id. “[FRCP] 8 marks a notable and generous departure from the hyper-technical, codepleading regime of a prior era, but it does not unlock the doors of discovery for a plaintiff armed
with nothing more than conclusions.” Id. at 678-79. Second, only a complaint that states a
plausible claim for relief survives a motion to dismiss. See id. at 679. “Determining whether a
complaint states a plausible claim for relief will . . . be a context-specific task that requires the
reviewing court to draw on its judicial experience and common sense.” Id.
Somewhat paradoxically, providing too much in the complaint may also be fatal to a
plaintiff. For instance, dismissal may be appropriate when the plaintiff’s allegations disclose
some absolute defense or other bar to recovery. See Weisbuch v. Cnty. of LA, 119 F.3d 778, 783,
n.1 (9th Cir. 1997) (stating that “[i]f the pleadings establish facts compelling a decision one way,
that is as good as if depositions and other . . . evidence on summary judgment establishes the
REPORT AND RECOMMENDATION / DECISION AND ORDER - 9
A dismissal without leave to amend is improper unless it is beyond doubt that the
complaint “could not be saved by any amendment.” Harris v. Amgen, Inc., 573 F.3d 728, 737
(9th Cir. 2009). The Ninth Circuit has held that “in dismissals for failure to state a claim, a
district court should grant leave to amend even if no request to amend the pleading was made,
unless it determines that the pleading could not possibly be cured by the allegation of other
facts.” Cook, Perkiss and Liehe, Inc. v. Northern California Collection Serv., Inc., 911 F.2d 242,
247 (9th Cir. 1990). The issue is not whether the plaintiff will prevail, but whether he “is entitled
to offer evidence to support the claims.” Diaz v. Int’l Longshore and Warehouse Union, Local
13, 474 F.3d 1202, 1205 (9th Cir. 2008) (citations omitted).
The Court’s review of Ocwen’s Motion to Dismiss is undertaken with an eye on Ninth
Circuit standards regarding pro se litigants. See Tucker v. Carlson, 925 F.2d 330 (9th Cir. 1991).
However, pro se litigants are held to the same procedural rules as counseled litigants. See King
v. Atiyeh, 814 F.2d 565, 567 (9th Cir. 1987). “Persons appearing without attorneys are required
to become familiar with and comply with all Local Rules of this District, as well as the Federal
Rules of Civil and/or Criminal Procedure. In exceptional circumstances, the Court may modify
these provisions to serve the ends of justice.” D. Idaho Loc. Civ. R. 83.7.
Plaintiffs’ Claims Are Barred by the Doctrines of Res Judicata and/or Claim
Res judicata, or claim preclusion, prohibits lawsuits on “any claims that were raised” in a
prior action. Stewart v. U.S. Bancorp, 297 F.3d 953, 956 (9th Cir. 2002). Res judicata applies
when there is: “(1) an identity of claims; (2) a final judgment on the merits; and (3) identity or
privity between parties.” Id.; see also Farmers Nat’l Bank v. Shirley, 878 P.2d 762, 767 (Idaho
1994). In other words, the “doctrine of res judicata bars a party from bringing a claim if a court
REPORT AND RECOMMENDATION / DECISION AND ORDER - 10
of competent jurisdiction has rendered a final judgment on the merits of the claim in a previous
action involving the same parties or their privies.” Siegel v. Federal Home Loan Mortg. Corp.,
143 F.3d 525, 528 (9th Cir. 1998).
Relevant here, the validity of the non-judicial foreclosure sale of the Property has already
been decided on the merits, thus undermining the overall thrust of Plaintiffs’ claims against
Ocwen. For example, in their current Complaint, Plaintiffs allege that they obtained a mortgage
loan for $256,000 in September 2005, and that the prior loan servicer granted them a loan
modification but never actually intended to modify their loan. See Compl., ¶¶ 5-11 (Docket No.
1). Plaintiffs further claim that they attempted to bid on the Property at the foreclosure sale in
May 2009, but were “denied the opportunity to bring the house into honor . . . .” Id. at ¶¶ 13-14.
Consequently, according to Plaintiffs, there are four “different claimants that claim to have the
right to enforce the [N]ote and possess[ ] the Deed of Trust, i.e., OneWest Bank, Deutsche Bank,
Altisource, and Ocwen.” Id. at ¶ 23. And, when they attempted to obtain a loan modification,
Plaintiffs assert that their negotiations with Ocwen were unsuccessful. See id. at ¶¶ 25-44.
These allegations, however, are not unique to the pending action. Indeed, Plaintiffs
raised the same claims in the 2009 State Court Action, challenging the foreclosure proceeding.
See generally Compl, attached as Ex. B to RFJN (Docket No. 11, Att. 2). That proceeding was
dismissed, with prejudice. See Order of Dismissal with Prejudice, attached as Ex. B to RFJN
(Docket No. 11, Att. 2). And, in the 2010 Federal Action, Plaintiffs likewise contested the
validity of the non-judicial foreclosure sale, while similarly alleging that OneWest violated
RESPA and TILA. See generally Compl., attached as Ex. C to RFJN (Docket No. 11, Att. 3).
REPORT AND RECOMMENDATION / DECISION AND ORDER - 11
That proceeding was also dismissed based, in large part, on res judicata, with Judge Lodge
concluding in no uncertain terms:
While the Breinholts may have liked Aegis Wholesale Corp [(their lender)] to work
with them on modifying their obligations, the fact remains the Breinholts point to no
statutory authority that the Defendants had a legal obligation to take the action
requested by the Breinholts.
In reviewing the record in this matter, the Court acknowledges the Breinholts’
frustration in trying to work out a solution on their family home of thirty years, but
when the Breinholts’ investments failed to provide them with the necessary monthly
income to make their loan payments, the lender was entitled to take action to
foreclose the property and sell it to another party. However, just because the state
court action was dismissed with prejudice, does not create new rights for the
Plaintiffs to seek a different outcome on their claims in federal court if such claims
have been or should have been raised in the state court action.
In applying the Ghazali dismissal factors to this case because the Breinholts did not
respond to the motions to dismiss, the Court finds all the factors weigh in favor of
dismissing the action. The public interest in an expeditious resolution of the
litigation is important in this case so the title is clear as to the Star Lane property and
litigants who have had their day in court in state court do not get to re-litigate the
same issues in federal court. The Court needs to manage its docket and Plaintiffs
have not provided any reason for this Court not to grant the motions to dismiss
certain Defendants. There is risk of prejudice to the Defendants if the doctrine of res
judicata is not fairly applied by the courts and Plaintiffs have had the opportunity for
a disposition on the merits when it filed the state court case regarding this property.
Finally, the Court is not aware of less drastic sanctions that Plaintiffs are entitled to
as a matter of law.
2/18/11 MDO, pp. 7-8, attached as Ex. D to RFJN (Docket No. 11, Att. 4).15 The 2010 Federal
Action’s dismissal was then upheld on appeal. See 11/7/16 Mem., pp. 2-3, attached as Ex. I to
RFJN (Docket No. 11, Att. 9) (res judicata warranted dismissal “because the Breinholts’ claims
were raised, or could have been raised, in a prior state court action between the parties or their
privies that resulted in a final judgment on the merits.”).
As discussed earlier, Judge Lodge also dismissed Plaintiffs’ TILA claims as barred by
the applicable statute of limitations, and dismissed Plaintiffs’ fraud, breach of fiduciary duty, and
FDCPA claims because the Plaintiffs’ default on the underlying Note was undisputed. See supra
(citing 2/18/11 MDO, p. 7, attached as Ex. D to RFJN (Docket No. 11, Att. 4).
REPORT AND RECOMMENDATION / DECISION AND ORDER - 12
Such congruities – in both the nature of claims between the earlier actions and this one,
alongside the respective courts’ disposition of those earlier actions – reveal to the undersigned
that the first two requirements for precluding claims via res judicata (identity of claims and final
judgment on the merits (see supra)) exist here. But Plaintiffs disagree, insisting that Ocwen’s
latest violations speak to a different party after the earlier actions, such that res judicata is
inapplicable toward dismissing their claims. See, e.g., Resp. to MTD, p. 2 (Docket No. 21)
(“The alleged previous cases do not apply. The standard of Res Judicata fails to apply. 1. These
violations have occurred after the claimed identity and privity. Although the same Regulatory
laws are applied they are different violations by a separate perpetrator after the issues
adjudicated in the other actions. 2. These claims have not been judge[d] and could not have been
judged as they occurred afterwards. 3. Ocwen’s violation[s] are separate and independent.
Privity does not apply.”); see also Mot. to Strike, pp. 1-2 (Docket No. 17) (“Plaintiffs are not
raising any issues or claims from any of the previous cases. The current claims address nothing
but fresh factual claims against the Defendants that occurred during the stay of the case pending
appeal of the lower courts’ decisions/orders/judgments. . . . . This lawsuit addresses the
Defendants’ conduct when Defendants and their attorneys engaged with Plaintiffs to finance the
property identified in this lawsuit.”). These arguments miss the point.
The common thread between Plaintiffs’ previous cases and the one now pending before
this Court is the implicit challenge to the non-judicial foreclosure proceeding, in addition to
Plaintiffs’ rejected efforts to modify their loan obligations. That is, the harm that Plaintiffs claim
to have suffered, coupled with their orbiting causes of action, has evolved over time to
consistently raise these same issues. However, the other lawsuits have put to rest those same
REPORT AND RECOMMENDATION / DECISION AND ORDER - 13
challenges, and therefore the thread that ties Plaintiffs’ overarching claims begins to unravel.
Res judicata “bars not only subsequent relitigation of a claim previously asserted, but also
subsequent relitigation of any claims relating to the same cause of action which were actually
made or which might have been made.” Lohman v. Flynn, 78 P.3d 378, 386 (Idaho 2003). The
“transactional concept of a claim is broad,” and claim preclusion “may apply even where there is
not a substantial overlap between the theories advanced in support of a claim, or in the evidence
relating to those theories.” Ticor Title v. Stanion, 157 P.3d 613, 620 (Idaho 2007). Such is the
case here. Though Ocwen was not a party to the 2009 State Court Action or the 2010 Federal
Action,16 Plaintiffs raise issues/claims challenging the 2009 foreclosure proceeding that have
already been resolved; res judicata therefore applies to dismiss such matters moving forward.17
As to the third requirement (identity or privity between parties (see supra)), the
undersigned is satisfied that Ocwen is in privity with the defendants in these earlier cases – that
is, that Ocwen shares a commonality of interest with OneWest and the Trust as Ocwen services
the loan on behalf of the Trust. See, e.g., Trotter v. Bayview Loan Servicing, 2015 WL 8966926,
*5 (D. Idaho 2015) (“The Court finds that the named Defendants here, Bayview, PEAK
Foreclosure Services and Pioneer Title of Ada County, possess a commonality of interest with
the state court defendants sufficient to find privity exists. The new Defendants in this action are
the successor trustee, a foreclosure service, and the servicing agent for the same loan which was
the subject of both state court proceedings and is the subject matter of this action. Privity exists
as the Defendants in this case are the successors in interest to the previously named state court
defendants and their interests are the same as those of the defendants in the prior actions.”).
Though not entirely clear, this would include any cause of action challenging the
validity of the 2009 foreclosure proceeding – arguably touching Plaintiffs’ intentional infliction
of emotional distress and Consumer Protection Act claims, given their relation to she same loan
transaction. Moreover, Plaintiffs’ TILA-related claim has already been rejected as untimely
because Plaintiffs’ default on the underlying Note was undisputed. See 2/18/11 MDO, p. 7,
attached as Ex. D to RFJN (Docket No. 11, Att. 4) (“Further, any claims pursuant to TILA are
barred by the applicable statute of limitations. As to any claims in the Complaint for fraud,
breach of fiduciary duty, or violation of Fair Debt Collections Act, the Court finds Plaintiffs
have not provided legal authority to be able to recover on these claims since the TILA claims are
time barred and the Breinholts’ default on the underlying note for the Star Lane property is
undisputed.”) (internal citation omitted). Finally, while Plaintiffs previously raised a RESPA
claim in the 2010 Federal Action, Judge Lodge dismissed the entire action with prejudice. See
REPORT AND RECOMMENDATION / DECISION AND ORDER - 14
See, e.g., San Diego Police Officers’ Ass’n v. San Diego City Emps. Ret. Sys., 568 F.3d 725, 734
(9th Cir. 2009) (“[I]f two actions involve the same injury to the plaintiff and the same wring by
the defendant then the same primary right at stake even if in the second suit the plaintiff pleads
different theories of recovery, seeks different forms of relief and/or adds new facts supporting
recovery.”); Kay v. City of Rancho Palos Verdes, 504 F.3d 803, 809 (9th Cir. 2007) (so long as
same primary right is at issue, res judicata “prevents litigation of all grounds for, or defenses to,
recovery that were previously available to the parties, regardless of whether they were asserted
or determined in the prior proceeding.”).
Notwithstanding the Potential Application of Res Judicata to Plaintiffs’ Current
Claims, they Nonetheless Fail to State a Claim
Plaintiffs’ TILA Claim is Time-Barred
As Judge Lodge already concluded, a claim for TILA damages must be brought “within
one year from the date of the occurrence of the violation.” 15 U.S. C. § 1640(e). “The
‘occurrence of the violation’ is presumably the date the loan was finalized” – in this case, in
2005 (and apparently transferred to Ocwen in 2013 (see Compl., ¶ 19 (Docket No. 1)). Shaw v.
Lehman Bros Bank, FSB, 2009 WL 790166, *4 (D. Idaho 2009). Plaintiffs’ October 2016
Complaint is therefore beyond the applicable statute of limitations and, accordingly, Plaintiffs
have no claim under any TILA damages argument.18
Though not responding to any particular argument, Plaintiffs state that “[t]hese new
actions are time tolled at the time they occurred by the perpetrator who committed them.” Resp.
to MTD, p. 2 (Docket No. 21); see also id. at p. 5. “Equitable tolling is generally applied in
situations ‘where the claimant has actively pursued his judicial remedies by filing a defective
pleading during the statutory period, or where the complainant has been induced or tricked by his
adversary’s misconduct into allowing the filing deadline to pass.’” O’Donnell v. Vencor, Inc.,
465 F.3d 1063, 1068 (9th Cir. 2006) (quoting Irwin v. Dep’t of Veterans Affairs, 498 U.S. 89, 96
(1990)). “When a complaint is otherwise time-barred on its face, the plaintiff must allege
REPORT AND RECOMMENDATION / DECISION AND ORDER - 15
Plaintiffs Have Not Stated a Claim for a RESPA Violation
RESPA claims brought under 12 U.S.C. § 2605 are subject to a three-year statute of
limitations period, running from the date of the occurrence of the violation. See 12 U.S.C.
§ 2614. Defendants imply that the statute of limitations started to run at the closing of the loan
transaction and, accordingly, “was time barred as of 2008.” Mem. in Supp. of MTD, p. 12
(Docket No. 13, Att. 1). However, Plaintiffs’ RESPA claim does not appear to be based on
Ocwen’s (or some other party in privity with Ocwen) failure to make required disclosures at the
time of application or closing; rather, Plaintiffs seem to be alleging that, in 2015, they sent an
inquiry to Ocwen that went unanswered in violation of RESPA. See Compl., ¶ 61 (Docket No.
1) (“Under RESPA, a written inquiry triggers obligations upon a servicer of a loan.”); see also
Resp. to MTD, p. 3 (Docket No. 21). If true, Plaintiffs’ RESPA claim is not time-barred.
Even so, Plaintiffs’ RESPA claim consist of nothing more than conclusory allegations
that Ocwen violated RESPA. In general, under 12 U.S.C. § 2605(e), a loan servicer has a duty to
respond to a borrower’s valid “qualified written request,” providing in pertinent part: “If any
servicer of a federally related mortgage receives a qualified written request from the borrower
(or an agent of the borrower) for information relating to the servicing of such loan, the servicer
shall provide a written response acknowledging receipt of the correspondence within 20 days . . .
.” 12 U.S.C. § 2605(e)(1)(A). It goes on to state that:
a qualified written request shall be a written correspondence, other than notice on a
payment coupon or other payment medium supplied by the servicer, that (i) includes,
specific facts explaining the failure to learn the basis for the claim within the statutory period
rather than relying on generalities.” Abels v. Bank of Am., N.A., 2012 WL 691790, *3 (N.D. Cal.
2012). Equitable tolling under federal law is reserved for “extreme cases” and “extraordinary
circumstances.” Ilaw v. Daughters of Charity Hlth. Sys., 2012 WL 381240, *5 (N.D. Cal. 2012).
REPORT AND RECOMMENDATION / DECISION AND ORDER - 16
or otherwise enables the servicer to identify, the name and account of the borrower;
and (ii) a statement of the reasons for the belief of the borrower, to the extent
applicable, that the account is in error or provides sufficient detail to the servicer
regarding other information sought by the borrower.
12 U.S.C. § 2605(e)(1)(B). Although Plaintiff alleges that they “sent a formal RESPA request
by third party notary which [Ocwen] ha[s] not answered” (Resp. to MTD, p. 3 (Docket No. 21)),
Plaintiffs fail to allege that their correspondence constituted a valid qualified written request as
defined by the statute. Moreover, there is no indication that Ocwen (or some other party in
privity with Ocwen) did not respond to Plaintiffs’ request. At most, Plaintiffs’ RESPA claim
reflects a disagreement with the response received. See id. Without more, this does not
constitute a basis for a RESPA claim.19
Plaintiffs’ Consumer Protection Act Claim Fails as a Matter of Law
Plaintiffs generally assert that Ocwen “breached [its] fiduciary duties to Plaintiffs” and
that Ocwen’s acts “constitute unfair and deceptive practices that occur in their trade or
commerce, which amounts to unlawful Usury and Unjust Enrichment.” Compl., ¶¶ 64-65
(Docket No. 1). These allegations fail to state a claim for violation of consumer protection laws.
First, these allegations are too vague and conclusory to meet the pleading requirements of Iqbal
and Twombly. Second, Plaintiffs do not specify which section of the Consumer Protection Act
Ocwen allegedly violated. Simply put, more is needed to support a Consumer Protection Act
claim. See, e.g., Mussell v. Federal Home Loan Mortg. Corp., 2015 WL 6163440, *5-6 (D.
Idaho 2015); Mortensen v. BAC Home Loans Servicing, LP, 2013 WL 943810, *5-6 (D. Idaho
2013); Cherian v. Countywide Home Loans, Inc., 2012 WL 5879281, *5 (D. Idaho 2012).
Whether Plaintiffs’ RESPA claim should be dismissed with prejudice (such that an amendment
would be futile) is appropriately within the province of Judge Lodge upon consideration of this
Report and Recommendation. However, as described earlier, Judge Lodge previously dismissed
the 2010 Federal Action, including Plaintiffs’ RESPA claim, with prejudice.
REPORT AND RECOMMENDATION / DECISION AND ORDER - 17
The Intentional Infliction of Emotional Distress Claim Fails as a Matter of Law
“To prevail on a claim for intentional infliction of emotional distress: (1) the conduct
must be intentional or reckless; (2) the conduct must be extreme and outrageous; (3) there must
be a causal connection between the wrongful conduct and the emotional distress; and (4) the
emotional distress must be severe.” Mortensen v. Stewart Title Guar. Co., 235 P.3d 387, 396
(Idaho 2010). “To be actionable, the conduct must be so extreme as to arouse an average
member of the community to resentment against the defendant, and must be more than
unreasonable, unkind, or unfair.” Id. at 394 (internal quotation marks omitted).
Here, as a matter of law, Plaintiffs’ allegations do not rise to the level of outrageous
conduct required to state a claim upon which relief may be granted. In view of the fact that
Plaintiffs make no claim that they did not owe the mortgage debt, or that it was not in default, it
is not possible that Ocwen’s alleged refusal to modify the loan was “outrageous” conduct. See
Sykes v. Mortg. Elec. Registration Sys., 2012 WL 914922, *5 (D. Idaho 2012) (in fiduciary duty
context, “[t]here is no duty under the Idaho Trust Deeds Act or the Deed of Trust for the trustee
to stop a foreclosure upon request of a borrower who is attempting to obtain a loan modification .
. . .”). In short, as a matter of law, Plaintiffs’ allegations are not adequate to constitute conduct
or actions sufficient to establish a claim for intentional infliction of emotional distress. See, e.g.,
Mortensen, 2013 WL 943810 at *6; Sykes v. Pioneer Title of Ada Co., 2013 WL 458343, *9 (D.
Based on the foregoing, IT IS HEREBY RECOMMENDED that Defendant’s Motion to
Dismiss (Docket No. 13) be GRANTED.
REPORT AND RECOMMENDATION / DECISION AND ORDER - 18
Pursuant to District of Idaho Local Civil Rule 72.1(b)(2), a party objecting to a
Magistrate Judge’s recommended disposition “must serve and file specific, written objections,
not to exceed twenty pages . . . within fourteen (14) days. . ., unless the magistrate or district
judge sets a different time period.” Additionally, the other party “may serve and file a response,
not to exceed ten pages, to another party’s objections within fourteen (14) days after being
served with a copy thereof.”
Additionally, based on the foregoing, IT IS HEREBY ORDERED that:
Plaintiffs’ Motion for Preliminary Injunction (Docket No. 4) is DENIED AS
Plaintiffs’ Motion to Strike Defendant’s Request to Take Judicial Notice for Lack
of Relevancy (Docket No. 17) is DENIED.
DATED: August 23, 2017
Honorable Ronald E. Bush
Chief U. S. Magistrate Judge
REPORT AND RECOMMENDATION / DECISION AND ORDER - 19
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