Kerr et al v. Ocwen Loan Servicing LLC et al

Filing 17

MEMORANDUM DECISION AND ORDER - The Court HEREBY ORDERS: 1. The Motion to Dismiss, (Dkt. 3 ), is GRANTED and the Complaint is DISMISSED WITHOUT PREJUDICE. 2. The Kerrs shall file an Amended Complaint within 30 days of the issuance of this Order. Th e Complaint must contain sufficient factual details to give Defendants notice of the claims asserted and the basis for those claims. Failure to comply with this Order will result in the dismissal of this case with prejudice. Signed by Judge David C. Nye. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (cjs)(Mailed to pro se Plaintiffs on 6/29/2018.)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO
TERRY KERR and DENNIS KERR,
Case No. 4:18-cv-00146-DCN
Plaintiffs,
v.

MEMORANDUM DECISION
AND ORDER

OCWEN LOAN SERVICING LLC,
PERKINS COIE LLP, AKERMAN LLP,
and DOES 1-10,
Defendants.

I. OVERVIEW
Pending before the Court is a Motion to Dismiss under Federal Rule of Civil
Procedure 12(b)(6) that Defendants Ocwen Loan Servicing LLC (“Ocwen”) and Perkins
Coie LLP (“Perkins Coie”) filed jointly on April 25, 2018. Dkt. 3. Having reviewed the
record and briefs, the Court finds that the parties have adequately presented the facts and
legal arguments. Accordingly, in the interest of avoiding further delay, and because the
Court finds that the decisional process would not be significantly aided by oral argument,
the Court will decide the motion without a hearing. Dist. Idaho Loc. Civ. R. 7.1(d)(2)(ii).
For the reasons outlined below, the Court GRANTS the Motion to Dismiss, but gives
Plaintiffs Terry Kerr and Dennis Kerr (“the Kerrs”) leave to file an Amended Complaint.

MEMORANDUM DECISION AND ORDER - 1

II. FACTUAL BACKGROUND
In their Motion to Dismiss, Ocwen and Perkins Coie give the following
background information:1
In June 2006, the Kerrs obtained a cash-out refinance loan for
$210,900. In August 2008, the Kerrs defaulted on their loan obligation.
American Home Mortgage Servicing, Inc., which later became known as
Homeward Residential, Inc. (“Homeward”), owned the loan and began nonjudicial foreclosure proceedings in October 2009. Before the foreclosure was
finalized, the Kerrs entered into a Loan Modification Agreement, effective
as of June 1, 2010. Under that agreement, the Kerrs’ first payment was due
July 1, 2010. The Kerrs failed to make the first payment and have made no
subsequent payments. Accordingly, foreclosure proceedings were initiated
once again.
In response to the foreclosure proceeding, Mr. Kerr filed a complaint
against Homeward in Idaho state court, which Homeward then removed to
the U.S. District Court for the District of Idaho. In his Complaint, Mr. Kerr
alleged that Homeward (then American Home Mortgage Servicing, Inc.)
(1) altered the Loan Modification Agreement without the Kerrs’ consent;
(2) criminally conspired with unidentified parties in a manner that
“amounted to civil racketeering” and violated the Service Members Civil
Relief Act; (3) acted in bad faith and violated the implied covenant of good
faith and fair dealing; (4) acted with racial animus; and (5) intentionally
inflicted emotional distress. On September 26, 2012, the Kerrs’ Complaint
was dismissed with prejudice.
During the course of that proceeding, Mr. Kerr filed a Notice of Bad
Faith and Misconduct and a Motion for Restraining Order against Perkins
Coie attorney Cynthia Yee-Wallace. The court granted defendants’ Motion
to Strike and Motion for Sanctions, concluding that “Plaintiff’s Notice and
Motion for Restraining Order are patently frivolous and are without a legal
or factual basis.”
In an opinion dated February 23, 2018, the Ninth Circuit affirmed the
district court’s order dismissing the First Action, with prejudice. Less than
two months later, the Kerrs filed the instant action in which they raise the
same allegations against Ocwen, which acquired Homeward and which is the
current servicer of the subject note, as well as Perkins Coie LLP, the
attorneys of record for Homeward in the First Action.

The Court cites the background provided by Ocwen and Perkins Coie because the Kerrs have
provided only sparse background information about this case.

1

MEMORANDUM DECISION AND ORDER - 2

Dkt. 3-1, at 2-4 (internal citations and footnotes omitted).
This “First Action” is Case No. 4:11-cv-00134-EJL-LMB in this District. The
Court takes judicial notice of the filings in the First Action, as those documents are
matters of public record or otherwise “not subject to reasonable dispute.” Fed. R. Evid
201(b); Reyn’s Pasta Bella, LLC v. Visa USA, Inc., 442 F.3d 741, 746 n.6 (9th Cir. 2006)
(taking judicial notice of briefs and other filings in related case and the appeal of that
case).
In their Complaint in this case, Dkt. 1, the Kerrs do not recite the background as
laid out by Ocwen and Perkins Coie. However, in their Response to the Motion to
Dismiss, Dkt. 14, the Kerrs do not deny these background facts either. The Kerrs do deny
receiving notice from the Ninth Circuit that it had affirmed this Court’s dismissal of the
First Action. Id.
Shortly after the Kerrs filed their Complaint, Ocwen and Perkins Coie filed the
pending Motion to Dismiss. Dkt. 3. That Motion is now fully briefed and ripe for
decision.
III. LEGAL STANDARD
Federal Rule of Civil Procedure 12(b)(6) permits a court to dismiss a claim if the
plaintiff has “fail[ed] to state a claim upon which relief can be granted.” “A Rule 12(b)(6)
dismissal may be based on either a ‘lack of a cognizable legal theory’ or ‘the absence of
sufficient facts alleged under a cognizable legal theory.’” Johnson v. Riverside
Healthcare Sys., LP, 534 F.3d 1116, 1121 (9th Cir. 2008) (citation omitted). Federal Rule
of Civil Procedure 8(a)(2) requires a complaint to contain “a short and plain statement of
MEMORANDUM DECISION AND ORDER - 3

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.” See Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 554 (2007). “This is not an onerous burden.” Johnson,
534 F.3d at 1121. A complaint “does not need detailed factual allegations,” but it must set
forth “more than labels and conclusions, and a formulaic recitation of the elements.”
Twombly, 550 U.S. at 555. The complaint must also contain sufficient factual matter to
“state a claim to relief that is plausible on its face.” Id. at 570. In considering a Rule
12(b)(6) motion, the Court must view the “complaint in the light most favorable to” the
claimant and “accept[] all well-pleaded factual allegations as true, as well as any
reasonable inference drawn from them.” Johnson, 534 F.3d at 1122.
The Court must construe this complaint “liberally,” as the Kerrs are proceeding
pro se. Erickson v. Pardus, 551 U.S. 89, 94 (2007) (citation omitted). “[A] pro se
complaint, however inartfully pleaded, must be held to less stringent standards than
formal pleadings drafted by lawyers and can only be dismissed for failure to state a claim
if it appears beyond doubt that the plaintiff can prove no set of facts in support of his
claim which would entitle him to relief.” Estelle v. Gamble, 429 U.S. 97, 106 (1976)
(internal quotation marks and citation omitted). “Dismissal of a pro se complaint without
leave to amend is proper only if it is absolutely clear that the deficiencies of the
complaint could not be cured by amendment.” Weilburg v. Shapiro, 488 F.3d 1202, 1205
(9th Cir. 2007) (quoting Schucker v. Rockwood, 846 F.2d 1202, 1203–04 (9th Cir. 1988)).

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IV. ANALYSIS
Defendants move to dismiss Plaintiffs complaint for two reasons: (1) because the
Kerrs have not asserted sufficient facts to support their claims; and (2) because res
judicata bars the Kerrs’ claims. The Court will briefly address each argument in turn.
In their Complaint, the Kerrs provide the following “factual allegations:”
2. The plaintiffs are entitled to relief for the crimes that were intentional done
through illegal means to acco[m]plish legal objectives. The defendants did
civil and criminal conspired violations and did willful, malicious, and
criminal crimes purposely to cause financial and emotional grief and distress.
The egre[g]ious and unscrupulous civil and criminal racketeering using
callous acts and conspired design of specific conduct to injure and damage
the plaintiffs was a complete affront to the justice system! The defendants
actions are defin[i]tely outside the normal bad faith misconduct actions!
3. The conspired design of the illegal and outr[]ageous criminal acts to injure
the plaintiffs does permit the recovery of damages actual and compensatory
as well as injunctive and declaratory relief!
Dkt. 1, at 2-3. The Kerrs intend these “factual allegations” to support the following four
claims for relief: (1) a violations of the Racketeer Influenced and Corrupt Organization
Act, “coupled with deceptive practices and conspired fraud;” (2) violations of the antitying provisions of the Bank Holding Act; (3) breach of the implied covenant of good
faith and fair dealing; (4) “racial animus and the intentional infliction of emotional and
financial distress to libel slander and cause defam[]ation to the plaintiffs.” Id. at 3-4.
The Kerrs factual allegations are severely deficient. The Court acknowledges that
the Kerrs are proceeding pro se, but they have provided no concrete details as to what
actions Defendants have taken that justify this suit. The Kerrs do not need to provide the
who, what, where, when, and how of all the events giving rise to their case, but they must

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provide enough details to give Defendants “fair notice of what the . . . claim is and the
grounds upon which it rests.” Twombly, 550 U.S. at 555. The Kerrs’ factual allegations
are conclusory at best and give no specifics that might give Defendants notice of the
factual basis of the claims asserted against them. In sum, even construing the Complaint
liberally, the Kerrs have failed to state any claim upon which the Court can grant relief
and dismissal pursuant to Federal Rule of Procedure 12(b)(6) is appropriate. The Court
will give the Kerrs leave to file an Amended Complaint because, based on the minimal
factual allegations in the Complaint, it is not “absolutely clear that the deficiencies of the
complaint could not be cured by amendment.” Weilburg, 488 F.3d at 1205.
As noted above, Ocwen and Perkins Coie also argue the Court should dismiss this
case under the doctrine of res judicata. “[I]n order for res judicata to bar litigation, the
following requirements must be met: (1) the same claim or cause of action arising out of
the same facts must be involved in both suits; (2) there must be a final judgment on the
merits in the prior action; and (3) the parties in the instant action must be the same as or
in privity with the parties in the prior action in question.” Coeur d’Alene Tribe v. Asarco
Inc., 280 F. Supp.2d 1094, 1118 (D. Idaho 2003) (citations omitted). Defendants argue
res judicata bars this action because the claims the Kerrs now assert are identical to the
claims the Kerrs asserted in the First Action, Case No. 4:11-cv-00134-EJL-LMB, which
this Court dismissed with prejudice.
The Kerrs have asserted such minimal factual background to support their claims
that the Court cannot determine if the claims the Kerrs now assert are the same claims
they asserted in the First Action. Accordingly, the Court cannot determine if res judicata
MEMORANDUM DECISION AND ORDER - 6

bars this litigation at this time. However, the Court will reconsider this argument, if
appropriate, in a future motion.
V. ORDER
The Court HEREBY ORDERS:
1. The Motion to Dismiss, (Dkt. 3), is GRANTED and the Complaint is DISMISSED
WITHOUT PREJUDICE.
2. The Kerrs shall file an Amended Complaint within 30 days of the issuance of this
Order. The Complaint must contain sufficient factual details to give Defendants
notice of the claims asserted and the basis for those claims. Failure to comply with
this Order will result in the dismissal of this case with prejudice.

DATED: June 28, 2018
_________________________
David C. Nye
U.S. District Court Judge

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