Opinion
For Michel D. Gardner, Plaintiff: Joel Samuel Farkas, LEAD ATTORNEY, Syd Arthur Licit APC, Studio City, CA.
Alvin Brown, Plaintiff, Pro se, Sherman Oaks, CA.
For Bank of America, NA, Wells Fargo Bank, NA, Defendants: Andrew L Minegar, Severson and Werson, Irvine, CA.
For First American Trustee Servicing Solutions, LLC, formerly known as First American Loanstar Trustee Services, LLC, Defendant: Yelena Cayton, Wright Finlay & Zak LLP, Newport Beach, CA.
ORDER GRANTING DEFENDANTS' MOTIONS TO DISMISS
MARGARET M. MORROW, UNITED STATES DISTRICT JUDGE.
Michel K. Gardner and Alvin Brown, proceeding pro se, filed this action on October 3, 2013 against Bank of America, NA (" BofA"), Wells Fargo Bank, NA (sued individually and also erroneously as " Wells Fargo Home Mortgage") (" Wells Fargo"), No Red Tape Mortgage (" No Red Tape"), First American Trustee Servicing Solutions, LLC (" First American"), First Horizon Home Loan Corporation, and various fictitious defendants. They alleged claims for violation of the Fair Debt Collection Practices Act (the " FDCPA"), 15 U.S.C. § 1692 et seq ., wrongful foreclosure, and breach of contract. Construed liberally, the complaint also possibly pled claims under California's Rosenthal Fair Debt Collection Practices Act, California Civil Code § 1788, et seq ., California's Unfair Competition Law (" UCL"), California Business & Professions Code § 17200, et seq ., and the Truth in Lending Act (" TILA"), 15 U.S.C. § 1601, et seq . On November 13, 2013, plaintiffs dismissed their claims against No Red Tape under Rule 41(a).
Complaint, Docket No. 1 (Oct. 3, 2013). On February 25, 2014, attorney Richard M. Ross substituted in as counsel for plaintiff Michael K. Gardner. (See Order Granting Substitution of Attorney, Docket No. 34 (Feb. 25, 2014).)
Id.
See Order Granting in Part and Denying in Part Defendants' Motion to Dismiss (" Order"), Docket No. 30 (Feb. 3, 2014) at 2 n. 2 (noting the same).
Notice of Dismissal by Brown, Docket No. 20 (Nov. 13, 2013); Notice of Dismissal by Gardner, Docket No. 21 (Nov. 13, 2013).
On February 3, 2014, the court granted in part and denied in part defendants' motion to dismiss. The court denied defendants' request to stay the action under Colorado River Water Conservation District v. United States, 424 U.S. 800, 96 S.Ct. 1236, 47 L.Ed.2d 483 (1976), pending resolution of a similar lawsuit plaintiffs filed in Los Angeles Superior Court on February 1, 2013, captioned Gardner, et al. v. Bank of America, N.A., et al . (" Gardner I "). The court granted defendants' request to dismiss plaintiffs' FDCPA and TILA claims with leave to amend, and declined to exercise supplemental jurisdiction over plaintiffs' state law claims.
Order.
Id. at 40.
Id. at 52-53.
On February 24, 2014, Gardner -- now represented by counsel -- filed a first amended complaint, stating FDCPA and TILA claims. Brown was not named as a plaintiff in this complaint as the court had earlier concluded he lacked standing. On March 13, 2014, BofA and Wells Fargo filed a motion to dismiss and a motion to strike portions of the first amended complaint. The same day, First American filed a motion to dismiss the first amended complaint. The court granted defendants' motions. It dismissed Gardner's claims against First Horizon for failure to prosecute under Rule 41(b) with prejudice. It similarly dismissed Gardner's TILA claim against First American with prejudice. The remainder of the claims were dismissed with leave to amend.
First Amended Complaint (" FAC"), Docket No. 33 (Feb. 24, 2014).
See Order at 52. The court issued an order to show cause directing returnable on or before February 13, 2014 as to why it should not dismiss Brown's claims for lack of standing. Brown did not respond to the order to show cause, and the court dismissed his claims with prejudice on May 29, 2014. (Order Granting Defendants' Motions to Dismiss (" Second MTD Order"), Docket No. 46 (May 29, 2014) at 24.)
Bank of America's and Wells Fargo's Motion to Dismiss, Docket No. 38 (Mar. 13, 2014); Bank of America's and Wells Fargo's Motion to Strike Amended Complaint, Docket No. 39 (Mar. 13, 2014).
First American's Motion to Dismiss Plaintiffs' First Amended Complaint, Docket No. 41 (Mar. 13, 2014).
Second MTD Order at 24.
Id. at 24.
Gardner filed a second amended complaint on June 19, 2014; the complaint alleges a FDCPA claim against all defendants, and a TILA claim solely against BofA. First American filed a motion to dismiss the second amended complaint on July 7, 2014. BofA and Wells Fargo filed a joint motion to dismiss on July 15, 2014. Gardner has not opposed the motions. Pursuant to Rule 78 of the Federal Rules of Civil Procedure and Local Rule 7-15, the court finds this matter appropriate for decision without oral argument. The hearing calendared for October 20, 2014, is therefore vacated, and the matter is taken off calendar.
Second Amended Complaint (" SAC"), Docket No. 52 (June 19, 2014).
First American Trustee Servicing Solutions, LLC's Motion to Dismiss Second Amended Complaint (" First American Motion"), Docket No. 54 (July 7, 2014).
Bank of America, N.A.'s and Wells Fargo's Motion to Dismiss Second Amended Complaint (" BofA/Fargo Motion"), Docket No. 57 (July 15, 2014).
I. FACTUAL BACKGROUND
A. Facts Alleged in the First Amended Complaint
Gardner alleges that she purchased property located at 15128 Valley Vista Boulevard, Sherman Oaks, California, 91403 in or about December 2004. In connection with the purchase, Gardner took out two loans. A primary $622,000 loan was allegedly obtained from lender No Red Tape. A secondary $155,000 loan was allegedly financed by First Horizon. In March 2006, Gardner obtained a mortgage refinance loan in the principal sum of $960,000 from Wells Fargo. Fidelity National Title Insurance Company was the trustee (" Fidelity National") named in the deed of trust securing the loan. The deed of trust conveyed the property to Fidelity National " in trust, with power of sale."
SAC, ¶ 8.
Id.
Id.
Bank of America's and Wells Fargo's Request for Judicial Notice (" RJN"), Docket No. 58 (July 15, 2014), Exh. 1 (March 28, 2006 Deed of Trust (" Wells Fargo DOT")); SAC, ¶ 9. The court takes judicial notice of this and other documents submitted with defendants' request for judicial notice infra .
Id. at 3.
Id.
Gardner contends that thereafter, Wells Fargo substituted First American as trustee in place of Fidelity National. On July 23, 2009, Wells Fargo purportedly transferred its beneficial interest in the loan to BofA. On September 17, 2009, First American recorded a notice of trustee's sale. It filed a second notice of trustee's sale on February 7, 2011. On March 2, 2011, the property was sold at a trustee's sale to BofA.
Id., ¶ 16. See also id., Exh. 3 (July 15, 2009 Substitution of Trustee (" Substitution of Trustee")).
Id., Exh. 2 (July 23, 2009 Assignment of Deed of Trust (" Assignment")).
Id., Exh. 7 (September 17, 2009 Notice of Trustee's Sale (" Notice of Sale")).
Id., Exh. 5 (February 7, 2011 Second Notice of Trustee's Sale (" 2nd Notice of Sale")).
Id., Exh. 9 (March 2, 2011 Trustee's Deed Upon Sale (" Deed Upon Sale")).
Gardner alleges that in fact, Wells Fargo transferred beneficial ownership of the promissory note and deed of trust to a group of investors that included or was led by BofA. Because BofA was the beneficial owner of the promissory note and deed of trust, she contends Wells Fargo lacked authority to foreclose. Gardner asserts that she asked defendants to provide documents reflecting the conveyances and assignments of the promissory note and deed of trust so she could discover the identity of the present beneficial owner(s) of the promissory note and deed of trust; they allegedly failed to do so, however. She alleges that this failure deprived her of the property, caused her to incur substantial costs removing personal property from the property, damaged her credit, and deprived her of the opportunity to obtain profits from the dwelling on the property. Gardner seeks damages as well as an order vacating and cancelling the trustee's deed upon sale.
Id., ¶ 19. Gardner asserts that the note and deed of trust were assigned to unknown investors " includ[ing] or [ ]le[d] by BofA" in connection with the issuance of a collateralized mortgage obligation prior to the date of the trustee's sale. (Id.) This is the only reference to " unknown investors" in the first amended complaint. All other allegations state that the deed of trust " had been assigned to . . . BofA." (See, e.g., id., ¶ 26. See also id., ¶ 21 (" Wells Fargo assigned the 2006 Note and 2006 Deed of Trust to Defendant BofA").)
SAC, ¶ 26.
Id., ¶ ¶ 35-36.
Id.
Id., ¶ ¶ 1-4 (Prayer).
B. Defendants' Request for Judicial Notice
Defendants ask that the court take judicial notice of various documents relevant to their motions. All of the documents have either been recorded by the Los Angeles County Recorder's Office or are filings or orders in Gardner I . As she has not opposed the motion, Gardner does not object to the request.
RJN; First American's Request for Judicial Notice, Docket No. 55 (July 7, 2014). Because First American requests that the court take judicial notice of the same documents as BofA and Wells Fargo, the court cites only BofA's and Wells Fargo's request in this order. The court grants First American's request for judicial notice for the reasons discussed infra .
See RJN at 2-5.
Gardner's failure to oppose the motion is discussed infra .
In deciding a Rule 12(b)(6) motion, the court generally looks only to the face of the complaint and documents attached thereto. Van Buskirk v. Cable News Network, Inc ., 284 F.3d 977, 980 (9th Cir. 2002); Hal Roach Studios, Inc. v. Richard Feiner & Co., Inc ., 896 F.2d 1542, 1555 n. 19 (9th Cir. 1990). A court must normally convert a Rule 12(b)(6) motion into a Rule 56 motion for summary judgment if it " considers evidence outside the pleadings. . . . A court may, however, 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." United States v. Ritchie, 342 F.3d 903, 907-08 (9th Cir. 2003). See Tellabs, Inc. v. Makor Issues & Rights, Ltd ., 551 U.S. 308, 322, 127 S.Ct. 2499, 168 L.Ed.2d 179 (2007) (a court may consider " other sources courts ordinarily examine when ruling on Rule 12(b)(6) motions to dismiss, in particular, documents incorporated into the complaint by reference, and matters of which a court may take judicial notice"); Branch v. Tunnell 14 F.3d 449, 453 (9th Cir. 1994) (noting that a court may consider a document whose contents are alleged in a complaint, so long as no party disputes its authenticity), overruled on other grounds by Galbraith v. County of Santa Clara, 307 F.3d 1119 (9th Cir. 2002).
Thus, in ruling on a motion to dismiss, the court can consider material that can be judicially noticed under Rule 201 of the Federal Rules of Evidence. Fed.R.Evid. 201. Under Rule 201, the court can take judicial notice of " [o]fficial acts of the legislative, executive, and judicial departments of the United States, " and " [f]acts and propositions that are not reasonably subject to dispute and are capable of immediate and accurate determination by resort to sources of reasonably indisputable accuracy." Courts have held that " [j]udicial notice is appropriate for records and 'reports of administrative bodies.'" United States v. 14.02 Acres of Land More or Less in Fresno County, 547 F.3d 943, 955 (9th Cir. 2008) (quoting Interstate Natural Gas Co. v. Southern California Gas Co ., 209 F.2d 380, 385 (9th Cir. 1954)).
Defendants ask that the court take notice of nine documents recorded by the Los Angeles County Clerk and Recorder: (1) the deed of trust associated with Gardner's mortgage refinance loan, dated March 28, 2006; (2) an assignment of deed of trust dated July 23, 2009; (3) a notice of default and election to sell under deed of trust dated June 12, 2009; (4) a substitution of trustee dated July 15, 2009; (5) a notice of trustee's sale dated February 7, 2011; (6) a grant deed dated December 27, 2004; (7) a grant deed dated July 24, 2008; (8) an order granting a motion for relief from the automatic stay under 11 U.S.C. § 362, filed December 2, 2010 in the United States Bankruptcy Court and recorded in the County Recorder's Office on December 28, 2010; and (9) a trustee's deed upon sale dated March 2, 2011.
RJN at 1-3.
In its prior order, the court took judicial notice of these documents because they are each time and date stamped, and have a record number and because other courts routinely take judicial notice of such documents as public filings. See Velazquez v. GMAC Mortgage Corp ., 605 F.Supp.2d 1049, 1057-58 (C.D. Cal. 2008) (taking judicial notice of documents recorded by the Los Angeles County Recorder's Office, including deeds of trust); see also Krug v. Wells Fargo Bank, N.A ., No. 11-CV-5190 YGR, 2012 WL 1980860, *2 (N.D. Cal. June 1, 2012) (public records are judicially noticeable under Rule 201); Grant v. Aurora Loan Services, Inc ., 736 F.Supp.2d 1257, 1264 (C.D. Cal. 2010) (noting that a " [party] provided a reference number for the document, showing that it was in fact recorded; this demonstrates that it is a public record"); Fimbres v. Chapel Mortgage Corp ., No. 09-CV-0886-IEG (POR), 2009 WL 4163332, *3 (S.D. Cal. Nov. 20, 2009) (taking judicial notice of a deed of trust, notice of default, notice of trustee's sale, assignment of deed of trust, and substitution of trustee as each was a public record); Angulo v. Countrywide Home Loans, Inc ., No. 1:09-CV-877-AWI-SMS, 2009 WL 3427179, *3 n. 3 (E.D. Cal. Oct. 26, 2009) (" The Deed of Trust and Notice of Default are matters of public record. As such, this court may consider these foreclosure documents"); Distor v. U.S. Bank NA, No. C 09-02086 SI, 2009 WL 3429700, *2 (N.D. Cal. Oct. 22, 2009) (finding that a deed of trust, notice of default and election to sell under deed of trust, and notice of trustee's sale were matters of public record and thus proper subjects of judicial notice).
Order at 8.
Neither the two grant deeds nor the order granting the motion for relief from the automatic stay under § 362 is relevant in deciding the pending motions. For this reason, the court declines to take judicial notice of these documents. Because the remainder of the documents recorded by the County Recorder are relevant, however, the court will take judicial notice of them.
BofA and Wells Fargo also ask that the court judicially notice three other documents, which are either pleadings or orders in Gardner I : (1) the Gardner I complaint, filed by plaintiffs against certain of the defendants in this case on February 1, 2013 in Los Angeles Superior Court; (2) an order sustaining defendants' demurrer and granting their motion to expunge in Gardner I, filed October 7, 2013; and (3) a January 6, 2014 judgment dismissing Gardner I with prejudice following Gardner's and Brown's failure to file an amended complaint within fifteen days after the court sustained defendants' demurrer. The court previously took judicial notice of these documents, and does so again. As the court previously noted, such documents are proper subjects of judicial notice because they are capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned. See Reyn's Pasta Bella, LLC v. Visa USA, Inc ., 442 F.3d 741, 746 n. 6 (9th Cir. 2006) (" To determine what issues were actually litigated in the Wal-Mart courts, we take judicial notice of Plaintiffs' briefs in those courts and the transcript of the Wal-Mart fairness hearing"); Manufactured Home Communities Inc. v. City of San Jose, 420 F.3d 1022, 1037 (9th Cir. 2005) (taking judicial notice of the City of San Jose's answer filed in a state court case); Meredith v. Oregon, 321 F.3d 807, 817 n. 10 (9th Cir. 2003), amended, 326 F.3d 1030 (9th Cir. 2003) (taking judicial notice of plaintiff's filing in state court); Holder v. Holder, 305 F.3d 854, 866 (9th Cir. 2002) (" We take judicial notice of the California Court of Appeal opinion and the briefs filed in that proceeding and in the trial court"); Smith v. Duncan, 297 F.3d 809, 815 (9th Cir. 2002) (taking judicial notice of state court documents).
RJN at 3.
Order at 9.
The documents reveal that on February 1, 2013, Gardner and Brown filed Gardner I in Los Angeles Superior Court against BofA, Wells Fargo, and First American. The state court complaint asserted claims (1) to void the trustee's deed upon sale; (2) to quiet title, and (3) for declaratory relief, as well as claims for (4) fraud and deceit, (5) breach of contract, (6) negligence, and (7) injunctive relief. Gardner and Brown also filed and recorded a lis pendens against the property. Wells Fargo and BofA demurred, and the state court sustained the demurrer on October 7, 2013. The court granted Gardner and Brown fifteen days' leave to amend, and expunged the lis pendens. On January 6, 2014, after Gardner and Brown had failed to file an amended complaint, the state court dismissed the action with prejudice as to BofA and Wells Fargo.
RJN, Exh. 10 ( Gardner I Complaint).
Id.
Id., Exh. 11 (Order Sustaining Demurrer and Expunging Lis Pendens in Gardner I (" Gardner I Order")).
Id., Exh. 12 (January 6, 2014 Judgment in Gardner I (" Gardner I Judgment")).
II. DISCUSSION
A. Gardner's Failure to File Opposition
Local Rule 7-12 provides that " [t]he failure to file any required paper, or the failure to file it within the deadline, may be deemed consent to the granting or denial of the motion." Ca CD L.R. 7-12. Because the motions to dismiss were set for hearing on October 20, 2014, the deadline for filing opposition was September 29, 2014. Gardner did not oppose the pending motions by that date, nor has she filed untimely opposition or any request for an extension of time to oppose since then. Accordingly, the court could, under Rule 7-12, grant the motions on this basis alone. See Cortez v. Hubbard, No. CV 07-4556-GHK (MAN), 2008 WL 2156733, *1 (C.D. Cal. May 18, 2008) (" Petitioner has not filed an [o]pposition to the [m]otion and has not requested any further extension of time to do so. Pursuant to Local Rule 7-12, her failure to do so could be deemed to be consent to a grant of the [m]otion"); Mack-University LLC v. Halstead, No. SA CV 07-393 DOC (ANx), 2007 WL 4458823, *4 n. 4 (C.D. Cal. Sept. 25, 2007) (holding, where a party " failed to oppose or in any way respond" to a motion, that " [p]ursuant to local Rule 7-12, the [c]ourt could grant [p]laintiffs' [m]otion on this ground alone"); Ferrin v. Bias, No. ED CV 02-535 RT (SGLx), 2003 WL 25588274, *1 n. 1 (C.D. Cal. Jan. 2, 2003) (" Under Local Rule 7-12, failure to file an opposition may be deemed consent to the granting of the motion"). Nonetheless, in the interest of deciding the case on the merits, the court considers the substance of the motions below.
B. Legal Standard Governing Motions to Dismiss Under Rule 12(b)(6)
A Rule 12(b)(6) motion tests the legal sufficiency of the claims asserted in the complaint. A Rule 12(b)(6) dismissal is proper only where there is either a " lack of a cognizable legal theory, " or " the absence of sufficient facts alleged under a cognizable legal theory." Balistreri v. Pacifica Police Dept ., 901 F.2d 696, 699 (9th Cir. 1988). The court must accept all factual allegations pleaded in the complaint as true, and construe them and draw all reasonable inferences from them in favor of the nonmoving party. Cahill v. Liberty Mut. Ins. Co ., 80 F.3d 336, 337-38 (9th Cir. 1996); Mier v. Owens, 57 F.3d 747, 750 (9th Cir. 1995).
The court need not, however, accept as true unreasonable inferences or conclusory legal allegations cast in the form of factual allegations. See Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 553-56, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (" While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the 'grounds' of his 'entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do"). Thus, a plaintiff's complaint must " contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.' . . . 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." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009); see also Twombly, 550 U.S. at 555 (" Factual allegations must be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact)" (citations omitted)); Moss v. United States Secret Service, 572 F.3d 962, 969 (9th Cir. 2009) (" [F]or a complaint to survive a motion to dismiss, the non-conclusory 'factual content, ' and reasonable inferences from that content, must be plausibly suggestive of a claim entitling the plaintiff to relief, " citing Iqbal and Twombly ).
C. Whether Gardner's Claims are Barred by Res Judicata
BofA and Wells Fargo contend that Gardner's claims against them are barred by res judicata . A federal court sitting in diversity must apply the res judicata law of the state in which it sits. Costantini v. Trans World Airlines, 681 F.2d 1199, 1201 (9th Cir. 1982) (" [A] federal court sitting in diversity must apply the res judicata law of the state in which it sits"); Borgman v. Insphere Ins ., No. 5:12-CV-06352 EJD, 2013 WL 1409921, *4 n. 4 (N.D. Cal. Apr. 8, 2013) (" Although the elements are not much different, this court looks to California's version of res judicata rather than the federal version argued by Defendants 'because a federal court sitting in diversity must apply the res judicata law of the state in which it sits'").
BANA/Fargo Motion at 4-7.
" Under California law, the claim preclusion aspect of res judicata, also referred to as bar or merger, precludes the maintenance of a second suit between the same parties on the same cause of action so long as the first suit concluded in a final judgment on the merits." Los Angeles Branch NAACP v. Los Angeles Unified School Dist ., 750 F.2d 731, 736-37 (9th Cir. 1984); see also Robi v. Five Platters, Inc ., 838 F.2d 318, 324 (9th Cir. 1988) (" The application of claim preclusion in California focuses on three questions: (1) was the previous adjudication on the merits, (2) was it final, and (3) does the current dispute involve the same 'claim' or 'cause of action'?"); United States v. Bhatia, No. CR 05-0334 SBA, 2007 WL 2554402, *3 (N.D. Cal. Sept. 4, 2007) (" The doctrine of res judicata applies when there exists between two separate cases (1) an identity of claims; (2) identity or privity between parties in both cases; and (3) a final judgment on the merits in the first case, " citing Stewart v. U.S. Bancorp, 297 F.3d 953, 956 (9th Cir. 2002), and Western Radio Servs. Co., Inc. v. Glickman, 123 F.3d 1189, 1192 (9th Cir. 1997)).
To examine whether suits involve the same claim or cause of action, " California has consistently applied the 'primary rights' theory, under which the invasion of one primary right gives rise to a single cause of action." Robi, 838 F.2d at 324 (quoting Slater v. Blackwood, 15 Cal.3d 791, 795, 126 Cal.Rptr. 225, 543 P.2d 593 (1975)); see also Crowley v. Katleman, 8 Cal.4th 666, 681, 34 Cal.Rptr.2d 386, 881 P.2d 1083 (1994) (" The primary right theory is a theory of code pleading that has long been followed in California. It provides 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 " primary right" analysis focuses on the injuries or harm alleged. Slater, 15 Cal.3d at 795 (" Even where there are multiple legal theories upon which recovery might be predicated, one injury gives rise to only one claim for relief"); Peiser v. Mettler, 50 Cal.2d 594, 605, 328 P.2d 953 (1958) (" [T]he 'cause of action' is based upon the harm suffered, as opposed to the particular theory asserted by the litigant").
BofA and Wells Fargo contend that the state action involved the same primary rights asserted here. They cite the state court complaint, which alleged that BofA and Wells Fargo " did not have the legal right or authority to prepare, execute and record the [notice of sale], " and " lack[ed] [ ] standing to create, execute and record the legal documentation necessary for a valid non-judicial foreclosure sale." The state court complaint also alleged that " [a]ll of the processes and procedures undertaken by the defendants, . . . to declare a default, assign the DOT . .., substitute the trustee and further prepare, execute and record a [notice of sale], were . . . done [without] legal justification or authority." Specifically, the Gardner I complaint alleged that " Wells [Fargo and BofA] ha[ve] failed to show that they had standing as a beneficiary under the Note or DOT"; that " Wells [Fargo] could not have the legal capacity or standing to assign the DOT to [BofA] and that very fact voids the assignment"; and that " the alleged new beneficiary Well[s Fargo] or [BofA] never maintained or legally acquired the rights of the beneficiary."
Gardner I Complaint, ¶ 15, 18.
Id., ¶ 26.
Id., ¶ ¶ 27-29.
BofA and Wells Fargo contend these allegations are mirrored in Gardner's second amended complaint in this case, and hence that that complaint asserts that the same primary right was violated. The court agrees. The second amended complaint alleges that BofA was the " legal and beneficial owner and holder of the [note and deed of trust], yet Defendants First American Trustee, on behalf of Defendant Wells Fargo, and Defendant Wells Fargo foreclosed on the [note and deed of trust] as if Defendant Wells Fargo was the true holder of the note and beneficiary of the [deed of trust]." The complaint pleads that defendants violated the FDCPA because " Wells Fargo could not enforce the [n]ote, nor instruct Defendant First American Trustee to foreclose on the [property] pursuant to the [deed of trust]." Similarly, she asserts that defendants violated TILA because Wells Fargo and First American failed to provide documentation reflecting their authority to foreclose, and in this way deprived her of the opportunity to challenge their authority. As can be seen, Gardner asserts the same injury in this action that she asserted in state court, i.e., that Wells Fargo lacked " authority to instruct [First American] to exercise the power to sell the [property]." The harm Gardner alleged she suffered in the state action is indistinguishable from the harm she pleads here. Thus, despite the fact that she did not allege claims under the FDCPA or TILA in state court, she could have done so; for that reason, there is an identity of claims presented. See Slater, 15 Cal.3d at 795 (" Even where there are multiple legal theories upon which recovery might be predicated, one injury gives rise to only one claim for relief"); Peiser v. Mettler, 50 Cal.2d 594, 605, 328 P.2d 953 (1958) (" [T]he 'cause of action' is based upon the harm suffered, as opposed to the particular theory asserted by the litigant"); Nochez v. Select Portfolio Servicing, Inc ., No. CV 12-01982 DDP CWX, 2012 WL 4087239, 81 (C.D. Cal. Sept. 17, 2012) (finding an identity of claims between a federal action and a prior state court action where " all of [p]laintiff's claims in both actions [were] tied to the validity of the deed of trust and [d]efendants' right to conduct a foreclosure sale"); see also Rose v. JPMorgan Chase Bank, N.A ., 542 Fed.Appx. 585, 586 (9th Cir. Oct. 15, 2013) (finding an identity of claims under federal preclusion law where the " factual allegations underlying [ ] claims [were] based on whether and how Chase took possession of the relevant promissory note and deed of trust . . . [and] th[e] case [sought] to relitigate whether Chase ha[d] the right to foreclose on the property, an issue already resolved in the adversary proceeding").
SAC, ¶ 29.
Id., ¶ 32.
Id., ¶ ¶ 43-45.
Id., ¶ 26.
Both TILA and the FDCPA provide for concurrent federal-state jurisdiction. See 15 U.S.C. § 1640(e); 15 U.S.C. § 1692k(d). See also, e.g., R .G. Financial Corp. v. Vergara-Nunez, 446 F.3d 178, 184 (1st Cir. 2006) (" [F]inally, because state courts possess concurrent jurisdiction over TILA claims, see 15 U.S.C. § 1640(e), Vergara could have asserted his counterclaim in the foreclosure proceeding"); Peterson v. United Accounts, Inc ., 638 F.2d 1134, 1135 (8th Cir. 1981) (" Jurisdiction in the federal district court is based on 15 U.S.C. § 1692k(d) of the FDCPA, which provides for concurrent state-federal jurisdiction").
There is also identity of parties between Gardner, BofA, and Wells Fargo. See Consumer Advocacy Grp., Inc. v. ExxonMobil Corp ., 168 Cal.App.4th 675, 689, 86 Cal.Rptr.3d 39 (2008) (" In order for res judicata to apply, the party against whom the defense is asserted must have been 'a party or was in privity with a party to the prior adjudication'"). Gardner sued BofA, Wells Fargo, and First American in state court. Her second amended complaint names the same defendants. It is thus clear that this factor is satisfied.
Gardner I Complaint at 1.
Gardner also erroneously sued Wells Fargo Home Mortgage. Even if Wells Fargo Home Mortgage were a proper additional party, it would not change the fact that Gardner's state court suit is res judicata as to BofA and Wells Fargo. See Damascus v. Five Unknown Named Agents for U.S. Attorney Generals Office, 892 F.2d 1045, 1990 WL 35, *1 (9th Cir. Jan. 5, 1990) (Unpub. Disp.) (" [T]he fact that a different or additional form of relief is requested or that additional parties are brought into the second action whose conduct allegedly contributed to the same wrong as that involved in the first action will not preclude the application of res judicata").
The final question, therefore, is whether the state court action ended in a final judgment on the merits. It did. The Superior Court dismissed Gardner's complaint with prejudice as to BofA and Wells Fargo. " There is no question that under California law, 'a dismissal with prejudice is the equivalent of a final judgment on the merits, barring the entire cause of action.'" Perez v. Gordon & Wong Law Grp., P.C ., No. 11-CV-03323-LHK, 2012 WL 1029425, *3 (N.D. Cal. Mar. 26, 2012) (quoting Boeken v. Philip Morris USA, Inc ., 48 Cal.4th 788, 793, 108 Cal.Rptr.3d 806, 230 P.3d 342 (2010)); see Torrey Pines Bank v. Superior Court, 216 Cal.App.3d 813, 820, 265 Cal.Rptr. 217 (1989) (" Dismissal with prejudice is determinative of the issues in the action and precludes the dismissing party from litigating those issues again"); see also Hells Canyon Pres. Council v. U.S. Forest Serv ., 403 F.3d 683, 686 (9th Cir. 2005) (" '[F]inal judgment on the merits' is synonymous with 'dismissal with prejudice'" (alteration original)).
Gardner I Judgment at 2.
Because Gardner's second amended complaint asserts causes of action based on the same primary right that underlay her claims in the state court action, and because that action ended in a final judgment on the merits in favor of the same defendants she sues here, her claims for violations of TILA and FDCPA are barred by res judicata. For that reason, the claims must be dismissed with prejudice.
D. Whether the Court Should Dismiss Gardner's FDCPA Claim Against First American
First American argues that Gardner's FDCPA claim against it must be dismissed because she fails adequately to allege that it is a debt collector within the meaning of the Act. To be held liable for a violation of the FDCPA, a defendant must -- as a threshold requirement -- fall within the Act's definition of " debt collector." See Heintz v. Jenkins, 514 U.S. 291, 294, 115 S.Ct. 1489, 131 L.Ed.2d 395 (1995); see also, e.g., Romine v. Diversified Collection Servs ., 155 F.3d 1142, 1146 (9th Cir. 1998). The FDCPA defines a " debt collector, " in pertinent part, as any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another." 15 U.S.C. § 1692a(6). Thus, a " debt collector" under the FDCPA is either (1) " a person" the " principal purpose" of whose business is the collection of debts (whether on behalf of himself or others); or (2) " a person" who " regularly" collects debts on behalf of others (whether or not it is the principal purpose of his business). " To state a claim for violation of the FDCPA, a plaintiff must allege that the defendant is a 'debt collector' collecting a 'debt.'" Ines v. Countrywide Home Loans, No. 08cv1267 WQH (NLS), 2008 WL 4791863, *2 (S.D. Cal. Nov. 3, 2008).
First American Motion at 10.
The FDCPA definition of " debt collector" excludes from its scope " any person collecting or attempting to collect any debt owed or due or asserted to be owed or due another to the extent such activity (i) is incidental to a bona fide fiduciary obligation or a bona fide escrow arrangement; (ii) concerns a debt which was originated by such person; (iii) concerns a debt which was not in default at the time it was obtained by such person; or (iv) concerns a debt obtained by such person as a secured party in a commercial credit transaction involving the creditor." 15 U.S.C. § 1692a(6)(F). Citing this provision, courts have concluded that mortgage lenders and servicers are not " debt collectors" covered by the statute so long as they took assignment of an interest in the loan prior to default by the debtor. See Perry v. Stewart Title Co ., 756 F.2d 1197, 1208 (5th Cir. 1985) (" The legislative history of section 1692a(6) indicates conclusively that a debt collector does not include the consumer's creditors, a mortgage servicing company, or an assignee of a debt, as long as the debt was not in default at the time it was assigned"); Nool v. HomeQ Servicing, 653 F.Supp.2d 1047, 1052-53 (E.D. Cal. 2009) (the definition of a debt collector " does not include [a] consumer's creditors, a mortgage servicing company, or any assignee of the debt, so long as the debt was not in default at the time it was assigned, " citing Perry, 756 F.2d at 1208); Carillo v. CitiMortgage, Inc ., No. CV 09-02404 AHM, 2009 WL 3233534, *4 (C.D. Cal. Sept. 30, 2009) (same).
In its prior order, the court dismissed Gardner's FDCPA claim because it contained no allegations that would support a finding that it is the principal purpose of any defendant's business to collect debts or that any defendant regularly collects debts owed to another. The court noted that Gardner's complaint alleged only, in conclusory fashion, that " each of the named defendants [was] acting solely as [a] 'debt collector[ ]' as that term is defined under the [FDCPA], " and that defendants were debt collectors because " they ha[d] no beneficial interest in" the promissory note and deed of trust. Gardner's her second amended complaint alleges that the notice of default stated that First American " may be acting as a debt collector attempting to collect a debt." It also alleges that First American " was not attempting to collect any debt owed or due or asserted to be owed or due another . . . incidental to a bonafide obligation "; ostensibly, Gardner asserts that the obligation was not bona fide because Wells Fargo ordered First American to foreclose, but lacked authority to do so. These allegations do not permit the court to conclude that the principal purpose of First American's business is the collection of debts, or that First American regularly collects debts on behalf of others. The notice of default stated only that First American might be a debt collector collecting a debt on one occasion; this does not suffice to show that it was a debt collector under the FDCPA. See Kalnoki v. First Am. LoanStar Tr. Servs. LLC, No. 2:11-CV-02816-GEB, 2014 WL 1757216, *4 (E.D. Cal. Apr. 29, 2014) (concluding that plaintiffs had failed plausibly to allege that defendant was a debt collector under the FDCPA because it sent plaintiffs a letter stating: " Please be advised that First American LoanStar Trustee Services, LLC, may be construed as a debt collector attempting to collect the above referenced debt. Any information obtained from you may be used for that purpose"); Ines v. Countrywide Home Loans, Inc ., No. 08-CV-1267-WQH-NLS, 2009 WL 690108, *1, *4 (S.D. Cal. Mar. 12, 2009) (holding that an allegation that defendants gave plaintiff papers stating " '[d]efendants may be a debt collector attempting to collect a debt, ' . . . [did] not allege facts to support the allegation that [d]efendants are debt collectors within the meaning of the . . . FDCPA").
Order at 15-16 (citing FAC, ¶ ¶ 9, 23).
SAC, ¶ 30.
Id., ¶ 32 (emphasis original).
The fact that Wells Fargo, on whose behalf First American was allegedly foreclosing, purportedly had no interest in the property similarly fails to demonstrate that First American is a debt collector. The exemption Gardner cites becomes relevant only if it is established that a defendant is a debt collector under the FDCPA. See 15 U.S.C. § 1692a(6)(F) (exempting from the definition of " debt collector" " any person collecting or attempting to collect any debt owed or due or asserted to be owed or due another to the extent such activity (i) is incidental to a bona fide fiduciary obligation or a bona fide escrow arrangement . . . ."). Because Gardner has again failed adequately to allege that First American is a debt collector under the FDCPA, the court must dismiss her FDCPA claim. See Schlegel v. Wells Fargo Bank, NA, 720 F.3d 1204, 1209 (9th Cir. 2013) (affirming the district court's dismissal of an FDCPA claim because " [t]he complaint fails to provide any factual basis from which we could plausibly infer that the principal purpose of Wells Fargo's business is debt collection. Rather, the complaint's factual matter, viewed in the light most favorable to the Schlegels, establishes only that debt collection is some part of Wells Fargo's business, which is insufficient to state a claim under the FDCPA"); Casault v. Federal National Mortgage Association, 915 F.Supp.2d 1113, 1126 (C.D. Cal. 2012) (" Although Plaintiffs allege Servicer Defendants are debt collectors, they do not support their allegation with any facts that show how Servicer Defendants were acting in a debt collecting capacity within the meaning of the FDCPA. '[A] plaintiff's obligation to provide the 'grounds' of his 'entitlement to relief' requires more than labels and conclusions.' Here, Plaintiffs have merely labeled the Servicer Defendants debt collectors and repeated the allegations they raised under their fraud claim"); Nool, 653 F.Supp.2d at 1052-53 (" Nothing in the complaint suggests that Barclays is a 'debt collector.' Therefore, the FDCPA is not triggered by Plaintiff's allegations").
First American contends the claim must also be dismissed because its conduct in foreclosing on the property is not a form of debt collection. In its prior order the court discussed the circuit split as to whether the initiation of non-judicial foreclosure proceedings can ever be considered debt collection as that term is used in the FDCPA. (Order at 16 n. 51.) Compare Glazer v. Chase Home Finance LLC, 704 F.3d 453, 464 (6th Cir. 2013) (" we hold that mortgage foreclosure is debt collection under the Act"); Kaltenbach v. Richards, 464 F.3d 524, 529 (5th Cir. 2006) (holding that " a party who satisfies § 1692a(6)'s general definition of a 'debt collector' is a debt collector for the purposes of the entire FDCPA even when enforcing security interests"); Wilson v. Draper & Goldberg, 443 F.3d 373, 374-76 (4th Cir. 2006) (rejecting an argument that plaintiff's mortgage ceased to be a " debt" after foreclosure proceedings commenced, because, to hold otherwise would create " an enormous loophole" in the FDCPA that would immunize any debt secured by an interest in real property from the provisions of the FDCPA if foreclosure proceedings were used to collect the debt) with Nadalin v. Automobile Recovery Bureau, Inc ., 169 F.3d 1084, 1085 (7th Cir. 1999) (stating that the FDCPA defines " debt collectors" as excluding repossessors and other enforcers of security interests, except that a repossessor may not take or threaten to take non-judicial action to dispossess debtor of property if there is no present right to possess the property claimed as collateral through an enforceable security interest). The court noted that the Ninth Circuit has not yet addressed this issue. In an August 2013 opinion, however, the Ninth Circuit Bankruptcy Appellate Panel affirmed a bankruptcy court's dismissal of an FDCPA claim against ReconTrust based on its sale of real property at foreclosure under a deed of trust. In re Nordeen, 495 B.R. 468, 488-89 (9th Cir. BAP 2013). The panel held that the bankruptcy court had not erred in concluding that ReconTrust was not a debt collector because foreclosing on real property under a deed of trust is not action to collect a debt. Id. The vast majority of district courts in this circuit have reached the same conclusion. See, e.g., Monreal v. GMAC Mortg., LLC, 948 F.Supp.2d 1069, 2013 WL 2444165, *14 (S.D. Cal. 2013) (noting that most district courts in the Ninth Circuit have found that foreclosure proceedings do not constitute " debt collection" for purposes of the FDCPA); Zhang v. Countrywide Home Loans, Inc ., No. 11-cv-03475 (NC), 2012 WL 1245682, *11 (N.D. Cal. Apr. 13, 2012) (noting that district courts throughout the Ninth Circuit have determined that foreclosure is not " debt collection" under the FDCPA); see also Natividad v. Wells Fargo Bank, N.A ., No. 3:12-cv-03646 JSC, 2013 WL 2299601, *5 (N.D. Cal. May 24, 2013) (stating that " [a]lthough the Ninth Circuit has yet to address whether foreclosure proceedings constitute 'debt collection' within the ambit of the FDCPA, the majority of courts in this District, as well as many other courts in this Circuit, have held that non judicial foreclosure proceedings are not debt collection, " and collecting cases). The court declined to decide whether defendants' conduct in foreclosing on Gardner's property subjected them to liability under the FDCPA because it concluded that Gardner had not adequately alleged that defendants were debt collectors. (Order at 16 n. 51.) For the same reason, the court once against declines to decide the matter.
In the court's prior order, it dismissed Gardner's TILA claim again First American with prejudice. (Order at 22.) The second amended complaint alleges a TILA claim solely against BofA. As noted, that claim is barred by res judicata .
III. CONCLUSION
For the reasons stated, the court grants defendants' motions to dismiss. Because Gardner's claims against BofA and Wells Fargo are barred by res judicata, the court dismisses them with prejudice. Although Gardner's claim against First American is not barred by res judicata , Gardner has had three chances to plead an FDCPA claim against First American. Each time, she has failed cure deficiencies noted by the court in the claim. Gardner has also failed to file timely opposition to First American's last two motions to dismiss. For these reasons, the court finds that leave to amend would be futile, and dismisses Gardner's FDCPA claim against First American with prejudice. See Kendall v. Visa U.S.A., Inc ., 518 F.3d 1042, 1051 (9th Cir. 2008) (" Dismissal without leave to amend is proper if it is clear that the complaint could not be saved by amendment"); California ex rel. California Department of Toxic Substances Control v. Neville Chemical Co ., 358 F.3d 661, 673 (9th Cir. 2004) (" [D]enial of leave to amend is appropriate if the amendment would be futile, " citing Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962)).
JUDGMENT FOR DEFENDANTS
Plaintiffs Michel Gardner and Alvin Brown filed this action on October 3, 2013, alleging claims for violation of the Fair Debt Collection Practices Act (" FDCPA"), 15 U.S.C. § 1692, et seq ., violation of the Truth in Lending Act (" TILA"), 15 U.S.C. § 1601, et seq ., violation of the Rosenthal Fair Debt Collection Practices Act, California Civil Code § 1788, et seq., California's Unfair Competition Law, California Business & Professions Code § 17200 et seq ., wrongful foreclosure, breach of contract, and breach of the implied covenant of good faith and fair dealing. On November 13, 2013, Gardner and Brown voluntarily dismissed their claims against defendant No Red Tape Mortgage. On February 3, 2014, the court dismissed all of Brown's claims for lack of standing. On May 29, 2014, the court dismissed Gardner's claims against First Horizon Home Loan Corporation with prejudice for failure to prosecute. On October 14, 2014, the court entered an order dismissing Gardner's claims against Bank of America, Wells Fargo Bank, and First American Trustee Servicing Solutions LLC with prejudice. Accordingly, IT IS ORDERED AND ADJUDGED
1. That the claims of plaintiff Alvin Brown are dismissed for lack of standing;
2. That plaintiff Michel Gardner take nothing by way of her complaint; and
3. That the action be, and it is hereby, dismissed.