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Julio v. Onewest Bank

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN JOSE DIVISION
Jun 5, 2015
Case No. 14-CV-03059-LHK (N.D. Cal. Jun. 5, 2015)

Opinion

Case No. 14-CV-03059-LHK

06-05-2015

ANTONIO A. JULIO, et al., Plaintiffs, v. ONEWEST BANK, FSB, et al., Defendants.


ORDER VACATING ORDER TO SHOW CAUSE AND GRANTING DEFENDANTS' MOTION TO DISMISS AMENDED COMPLAINT WITH PREJUDICE

Re: Dkt. No. 34, 39

Plaintiffs Antonio A. Julio and Cleopatra U. Julio ("Plaintiffs") bring this action against OneWest Bank, FSB ("OneWest"). Before the Court is OneWest's Motion to Dismiss Plaintiffs' Amended Complaint in its entirety. ECF No. 34 ("Motion"). Plaintiffs failed to file an opposition. Pursuant to Civil Local Rule 7-1(b), the Court finds this matter appropriate for resolution without oral argument and hereby VACATES the June 25, 2015 hearing on this Motion. Having considered OneWest's Motion, the record in this case, and the applicable law, the Court VACATES its May 26, 2015 Order to Show Cause and the June 11, 2015 Show Cause Hearing and DISMISSES with prejudice Plaintiffs' Amended Complaint for lack of subject matter jurisdiction.

I. BACKGROUND

A. Factual Background

Plaintiffs are husband and wife, and according to documents attached to their Complaint, residents of Santa Clara County, California. ECF No. 1 ("Compl.") ¶ 1. On December 16, 2003, Plaintiffs executed a deed of trust in connection with a $377,600 loan secured by the property located at 3407 Rio Brave Drive, San Jose, California. Compl. Ex. A ("Deed of Trust"). The Deed of Trust named Seaside Financial Corporation as the trustee, and First Federal Bank of California ("First Federal") as the beneficiary. Id. The Deed of Trust was recorded in the Santa Clara County Recorder's Office on December 30, 2003 as instrument number 17551668. Id.

On March 29, 2010, First Federal executed a corporate assignment of instrument number 17551668, assigning First Federal's rights to OneWest. Id. Ex. C ("Corporate Assignment"). The Corporate Assignment was recorded in the Santa Clara County Recorder's Office on April 26, 2010 as instrument number 20689304. Id.

Plaintiffs also attached to their Complaint a substitution of trustee, dated March 4, 2009. Id. Ex. B ("Substitution of Trustee"). The Substitution of Trustee pertains to instrument number 18380777, see id., which is not attached to or described in Plaintiffs' Complaint, see generally Compl. According to the Substitution of Trustee, New Century Title Company, the original trustee, substituted Regional Service Corporation as the successor trustee under the relevant deed of trust. Id. Ex. B.

B. Procedural Background

On July 3, 2014, Plaintiffs filed the instant lawsuit in this Court. See Compl. Plaintiffs assert claims for "illegal recording of substitution of trustee and corporate assignment of deed of trust"; "fraud, misleading, and intentional misrepresentation"; "conspiracy"; and "unfair deceptive business practices act for making a false document." Id. at 1. Plaintiffs claim that the Substitution of Trustee was "fabricated, forged, [and] false document." Id. ¶ 8. Plaintiffs appear to base this allegation on the fact that the Substitution of Trustee references different parties, such as New Century Title Company, than the Deed of Trust. Id. ¶ 7. Plaintiffs further appear to allege that because the Substitution of Trustee was fabricated or forged, the Corporate Assignment recorded by OneWest was "illegal." Id. ¶ 9. Plaintiffs further allege that a signature which appears on the Corporate Assignment was "no[t] bona fide" and was signed by a robo-signer. Id. ¶¶ 11, 15. Plaintiffs also claim that mortgage loans executed in connection with their property were improperly or illegally securitized, and that this improper securitization rendered subsequent transfers of the Deed of Trust invalid. Id. ¶¶ 19-21. Plaintiffs cite two statutes in their Complaint as the bases for their cause of action: 18 U.S.C. § 1001, and California's Unfair Deceptive Business Practices Act. Id. ¶¶ 8, 23.

On August 14, 2014, OneWest filed a motion to dismiss. ECF No. 4. OneWest moved pursuant to Federal Rule of Civil Procedure 12(b)(6) to dismiss Plaintiffs' Complaint on the grounds that Plaintiffs failed to allege any actual injury and therefore lacked the requisite standing to bring a lawsuit, and that Plaintiffs failed to state any claim for relief. Id. at 4-5. Plaintiffs filed an opposition to the motion to dismiss on January 14, 2015, more than four months after the August 28, 2014 deadline imposed by Civil Local Rule 7-3(a). ECF No. 25.

On January 16, 2015, this Court granted OneWest's motion to dismiss concluding that the Court lacked subject matter jurisdiction over this action. ECF No. 27. Specifically, this Court determined that, although it cited an inapplicable federal criminal statute, Plaintiffs' Complaint failed to allege any federal cause of action. Id. at 5. Moreover, this Court determined that the parties were not diverse, based on the allegations in the Complaint. Id. Because this Court is of limited jurisdiction, the Court dismissed Plaintiffs' Complaint for lack of subject matter jurisdiction and granted Plaintiffs leave to amend within 30 days. Id. at 6. The Court concluded: "failure to cure the deficiencies identified in this Order[] will result in a dismissal with prejudice." Id.

On February 17, 2015, Plaintiffs filed an Amended Complaint. ECF No. 31. Plaintiffs' Amended Complaint is almost identical to the original Complaint, asserting the same claims and the same California residence of both Plaintiffs and OneWest. See id. Moreover, while Plaintiffs removed the prior citation to the federal criminal statute, Plaintiffs' Amended Complaint fails to cite even a single federal statute. See id.

On March 2, 2015, OneWest filed the instant Motion. ECF No. 34. Pursuant to Civil Local Rule 7-3(a), Plaintiffs' opposition to OneWest's Motion to dismiss was due on March 16, 2015. Plaintiffs failed to file either an opposition to Defendants' Motion or a statement of non-opposition to Defendants' Motion, as required by the Local Rules. On May 26, 2015, this Court ordered Plaintiffs to show cause why this case should not be dismissed with prejudice for failure to prosecute and set a hearing for June 11, 2015, at 1:30 p.m. ECF No. 39.

On June 3, 2015, Plaintiffs requested "an extension of time for 30 days to show cause and 30 days for Opposition on Defendant's Motion to Dismiss." ECF No. 43. Specifically, Plaintiffs contend that good cause for an extension exists "based on the fact that the Plaintiff[s] in this case ha[ve] no Attorney and they are Pro Se Litigants." Id.

II. LEGAL STANDARD

A. Motion to Dismiss

Pursuant to Federal Rule of Civil Procedure 12(b)(6), a defendant may move to dismiss an action for failure to allege "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). "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. 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." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal citations omitted). For purposes of ruling on a Rule 12(b)(6) motion, the Court "accept[s] factual allegations in the complaint as true and construe[s] the pleadings in the light most favorable to the nonmoving party." Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008).

If the Court determines that the complaint should be dismissed, it must then decide whether to grant leave to amend. Under Rule 15(a) of the Federal Rules of Civil Procedure, leave to amend "should be freely granted when justice so requires," bearing in mind that "the underlying purpose of Rule 15 . . . [is] to facilitate decision on the merits, rather than on the pleadings or technicalities." Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000) (en banc) (internal quotation marks omitted). When dismissing a complaint 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." Id. at 1130 (quoting Doe v. United States, 58 F.3d 494, 497 (9th Cir. 1995)). Furthermore, the Court "has a duty to ensure that pro se litigants do not lose their right to a hearing on the merits of their claim due to ignorance of technical procedural requirements." Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990). Nonetheless, a court "may exercise its discretion to deny leave to amend due to 'undue delay, bad faith or dilatory motive on part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party. . . , [and] futility of amendment.'" Carvalho v. Equifax Info. Servs., LLC, 629 F.3d 876, 892-93 (9th Cir. 2010) (alterations in original) (quoting Foman v. Davis, 371 U.S. 178, 182 (1962)).

B. Subject Matter Jurisdiction

Federal courts are courts of limited jurisdiction, and a cause of action is presumed to lie outside this limited jurisdiction until the party asserting jurisdiction establishes otherwise. Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). A district court has a continuing obligation to determine if it has subject matter jurisdiction. Augustine v. United States, 704 F.2d 1074, 1077 (9th Cir.1983). If a district court does not have proper subject matter jurisdiction, then that district court must dismiss the matter. Id; see also Fed. R. Civ. P. 12(h)(3) ("If the court determines at any time that it lacks subject-matter jurisdiction, the court must dismiss the action."). A federal court generally may not rule on the merits of a case without first determining that the court has subject matter jurisdiction. See Sinochem Int'l Co. v. Malay. Int'l Shipping Corp., 549 U.S. 422, 430-31 (2007).

III. DISCUSSION

A. Order to Show Cause

In response to this Court's Order to Show Cause, Plaintiffs requested extensions of time to respond to this Court's show-cause Order and to file an opposition to OneWest's Motion. Plaintiffs' requests are DENIED. Although the Court construes pleadings liberally in their favor, "pro se litigants are bound by the rules of procedure." Ghazali v. Moran, 46 F.3d 52, 54 (9th Cir. 1995). In this case, Plaintiffs' opposition to OneWest's Motion is more than two months late and the hearing on OneWest's Motion is two weeks away, on June 18, 2015. Moreover, the Court observes, Plaintiffs' opposition (ECF No. 25) to OneWest's first Motion to Dismiss (ECF No. 4) was more than four months late. See ECF No. 27.

However, because Plaintiffs have filed a response to this Court's Order to Show Cause, this Court will not dismiss Plaintiffs' case for failure to prosecute. The Court's Order to Show Cause is hereby VACATED. The Court will now address the merits of OneWest's Motion.

B. OneWest's Motion to Dismiss

OneWest argues that Plaintiffs' Amended Complaint is largely identical to Plaintiffs' original complaint and, therefore, should be dismissed for the same reasons articulated in this Court's prior Order dismissing Plaintiffs' Complaint. ECF No. 34 at 3-4. The Court agrees.

The Court once again finds that Plaintiffs have failed to establish that this Court has jurisdiction over the parties' dispute. Plaintiffs' original Complaint was dismissed for lack of subject matter jurisdiction for (a) lack of federal question jurisdiction (the Complaint failed to allege a federal cause of action), and (b) lack of diversity jurisdiction (the Complaint alleged that each party was a resident of California). ECF No. 27 at 5-6. Plaintiffs' Amended Complaint suffers from the same deficiencies. First, Plaintiffs' Amended Complaint fails to cite even a single federal statute or allege a single federal cause of action. ECF No. 31. Accordingly, even under a liberal construction of their Amended Complaint, Plaintiffs fail to establish that federal question jurisdiction exists under 28 U.S.C. § 1331. Second, Plaintiffs' Amended Complaint alleges that each party resides in California. ECF No. 31 at 2. Accordingly, diversity jurisdiction cannot provide a basis for this Court's exercise of jurisdiction. Plaintiffs have again failed to meet their burden to demonstrate that federal subject matter jurisdiction exists in this case. Accordingly, the Court DISMISSES Plaintiffs' Amended Complaint.

Plaintiffs have been unable to establish that this Court has jurisdiction despite having an opportunity to amend their Complaint after the Court specifically identified these deficiencies and informed Plaintiffs how to overcome these deficiencies. See ECF No. 27 at 6 ("It is possible that Plaintiffs could cure the deficiencies identified in their Complaint by, for instance, pointing to a federal statute that would provide the foundation for at least one of their asserted causes of action."). This Court also previously warned Plaintiffs that "failure to cure the deficiencies identified in this Order[] will result in dismissal with prejudice." ECF No. 27 at 6. As explained above, Plaintiffs have indeed failed to cure the deficiencies identified in the Court's prior Order. Accordingly, the Court hereby DISMISSES with prejudice Plaintiffs' Amended Complaint because of Plaintiffs' repeated failure to cure these deficiencies and the futility of further amendment. Carvalho, 629 F.3d at 892-93. IT IS SO ORDERED. Dated: June 5, 2015

/s/_________

LUCY H. KOH

United States District Judge


Summaries of

Julio v. Onewest Bank

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN JOSE DIVISION
Jun 5, 2015
Case No. 14-CV-03059-LHK (N.D. Cal. Jun. 5, 2015)
Case details for

Julio v. Onewest Bank

Case Details

Full title:ANTONIO A. JULIO, et al., Plaintiffs, v. ONEWEST BANK, FSB, et al.…

Court:UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN JOSE DIVISION

Date published: Jun 5, 2015

Citations

Case No. 14-CV-03059-LHK (N.D. Cal. Jun. 5, 2015)