(PS) Love v. Tri-Counties Bank

• Court: District Court, E.D. California
• Decided: February 7, 2025
• Docket: 2:24-cv-01823
• Status: Unknown

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 MARY LOVE, Case No. 2:24-CV-1823-TLN-CSK 12 Plaintiff, FINDINGS AND RECOMMENDATIONS GRANTING DEFENDANT’S MOTION TO 13 v. DISMISS 14 TRI COUNTIES BANK, 15 Defendant. (ECF No. 5) 16 17 Plaintiff Mary Love is proceeding in this action pro se. (ECF No. 1.)1 Pending 18 before the Court is Defendant Tri Counties Bank’s2 motion to dismiss pursuant to 19 Federal Rules of Civil Procedure 12(b)(6). For the reasons that follow, the Court 20 recommends GRANTING Defendant’s motion to dismiss without leave to amend. 21 / / / 22 / / / 23 / / / 24 / / / 25

26 1 This matter proceeds before the undersigned pursuant to 28 U.S.C. § 636, Fed. R. Civ. P. 72, and Local Rule 302(c). 27 2 Defendant Tri Counties Bank’s name in incorrectly spelled in the Complaint as “Tri- Counties Bank.” See ECF No. 5. The Clerk of the Court is directed to update the docket 28 to reflect the correct spelling of Defendant Tri Counties Bank’s name. 1 I. BACKGROUND 2 A. Factual Background3 3 Plaintiff initiated this action to challenge a mortgage foreclosure of her real 4 property located at 13312 Thistle Loop Road, Penn Valley, CA, 95046 (“Subject 5 Property”). Compl. at 2-3, (ECF No. 1). Plaintiff alleges that in August 2017, she began 6 facing “significant health and financial difficulties due to circumstances beyond her 7 control,” which prevented her from being able to make payments on the Subject 8 Property’s senior and junior mortgage. Id. ¶ 5. On July 26, 2018, the senior mortgage 9 holder, Carrington Mortgage Services, began foreclosure proceedings on the Subject 10 Property by issuing Plaintiff a notice of foreclosure. Id. ¶ 6, Exh. E. At various times 11 during foreclosure proceedings, Plaintiff requested loan modification assistance from 12 Carrington Mortgage Services and Defendant in an effort to “stabilize her financial 13 situation” and avoid foreclosure. Id. ¶¶ 6, 8-11, 13. To “save her home and mange her 14 overwhelming debts,” on January 19, 2019, Plaintiff filed for Chapter 13 bankruptcy in 15 the United States Bankruptcy Court for the Eastern District of California, which was 16 subsequently dismissed on February 19, 2019 for failure to timely file documents. Id. ¶ 7, 17 Exh. G. 18 On September 28, 2019, Plaintiff alleges she “received an IRS Form 1099-C from 19 Defendant, indicating a cancellation of debt for the Second Mortgage” but that at that 20 time it was “not properly communicated to Plaintiff” the contents of the letter. Id. ¶ 9, Exh. 21 J. Plaintiff alleges she “discovered the 1099-C form issued by [Defendant] among her 22 archived files” on September 10, 2020. Id. ¶ 17. Despite receiving from Carrington 23 Mortgage Services a Final Loan Modification Agreement on October 28, 2019, Plaintiff 24 alleges Defendant’s failure to respond to Plaintiff’s repeated loan modification requests 25

26 3 These facts primarily derive from the Complaint (ECF No. 1), which are construed in the light most favorable to Plaintiff as the non-moving party. Faulkner v. ADT Sec. 27 Servs., 706 F.3d 1017, 1019 (9th Cir. 2013). However, the Court does not assume the truth of any conclusory factual allegations or legal conclusions. Paulsen v. CNF Inc., 559 28 F.3d 1061, 1071 (9th Cir. 2009). 1 “exacerbat[ed] Plaintiff’s financial distress” and “highlighted a pattern of neglect and 2 disregard for Plaintiff’s efforts to find a resolution.” Id. ¶¶ 10-11. 3 Plaintiff further alleges Defendant’s issuance of the Form 1099-C indicating 4 “[Defendant’s] loan had been canceled or discharged” was “subsequently recorded on 5 Plaintiff’s credit report in August 2021, effectively documenting the discharge of debt.” Id. 6 ¶ 14. Plaintiff alleges despite the cancellation of Defendant’s loan, “Defendant engaged 7 in a practice known as a ‘sleeper second loans’ or ‘zombie mortgages’ by attempting to 8 collect on the original loan amount plus accrued interest and arrears that were accruing 9 unbeknownst to the Plaintiff four years later.” Id. 10 After discovering the issuance of Defendant’s 1099-C form, on November 19, 11 2020, Plaintiff “formally requested that Defendant release the Deed of Trust and lien on 12 her property.” Id. ¶¶ 17-18. On July 28, 2022, Defendant sent Plaintiff a Notice of Default 13 as to the Subject Property. Id. ¶ 21, Exh. S. On August 23, 2022, Plaintiff requested from 14 Defendant an extension as to the Notice of Default, but did not receive a response. Id. 15 ¶ 22, Exh. T. Subsequently, on September 22, 2022, Defendant recorded a “Notice of 16 Default and Election to Sell Under Deed of Trust” as to the Subject Property. Id. ¶ 23, 17 Exh. V. 18 On October 6, 2022, Plaintiff filed an action in this district court alleging various 19 claims related to the denial of her loan modifications and foreclosure proceedings on the 20 Subject Property. Compl. ¶ 23; see also Love v. Tri-Counties Bank, 2:22-cv-01761-TLN- 21 CKD, ECF No. 1 (E.D. Cal. Oct. 6, 2022) (“Love I”). Plaintiff alleges her prior attorneys’ 22 actions created difficulties in Plaintiff being able to “defend her home and navigate the 23 legal process” in Love I. Compl. ¶¶ 25, 27. Plaintiff further alleges she had significant 24 personal hardships during Love I which impacted her ability to manage her legal affairs. 25 Id. ¶ 40. Plaintiff alleges the district court’s dismissal in Love I “dashed Plaintiff’s hopes 26 of delaying the foreclosure sale, intensifying her distress and leaving her with limited 27 options to protect her home.” Id. ¶ 38. Plaintiff alleges the pending appeal in Love I 28 concerns the “underlying issues of this case” and is a driven by her “need to halt the 1 foreclosure process and find a fair resolution to her financial troubles.” Id. at 2, ¶¶ 33, 35- 2 36. 3 B. Procedural Background 4 On June 27, 2024, Plaintiff filed this second action alleging the following fifteen 5 (15) claims: (1) wrongful disclosure due to denial of loan modification; (2) violation of 6 contractual obligations and the California Homeowners’ Bill of Rights; (3) violation of the 7 Real Estate Settlement Procedures Act (RESPA); (4) violation of the California 8 Consumer Credit Reporting Agencies Act (CCRAA); (5) violation of the California Unfair 9 Competition Law (UCL); (6) professional negligence; (7) negligent misrepresentation and 10 wrongful foreclosure due to non-existent entity; (8) intentional infliction of emotional 11 distress; (9) violation of the California Rosenthal Fair Debt Collection Practices Act 12 (RFDCPA); (10) violation of the California Elder Financial Abuse Act; (11) breach of 13 implied duty of good faith and fair dealing; (12) wrongful foreclosure and eviction in 14 violation of the California Fair Employment and Housing Act (FEHA); (13) wrongful 15 foreclosure and eviction in violation of the California Unruh Civil Rights Act; 16 (14) temporary restraining order and preliminary injunction; and (15) declaratory relief. 17 Compl. ¶¶ 54-139. For relief, Plaintiff requests monetary damages and injunctive relief, 18 including a temporary restraining order and preliminary injunction, to “reverse the trustee 19 sale dated June 12, 2024, of [the Subject Property] and to prevent and halt any eviction 20 proceedings based on that trustee sale.” Id. at 2. On July 18, 2024, the district court 21 denied Plaintiff’s request for a temporary restraining order and a preliminary injunction 22 for failure to satisfy the requirements of Local Rule 231. (ECF No. 2.) 23 On July 18, 2024, Defendant filed a motion to dismiss pursuant to Federal Rules 24 of Civil Procedure 12(b)(6). Def. Mot. (ECF No. 5). On August 6, 2024, Plaintiff filed a 25 motion for a 60-day extension of time to file an opposition to the motion to dismiss. (ECF 26 No. 9.) On August 8, 2024, the Court granted in part, Plaintiff’s motion and provided 27 Plaintiff until August 22, 2024 to file her opposition. (ECF No. 10.) The Court also 28 extended Defendant’s reply to 10 days after Plaintiff’s opposition was filed and submitted 1 the motion for decision on the record and briefs pursuant to Local Rule 230(g). Id. 2 Plaintiff filed her opposition, and Defendant filed a reply and objections thereafter. (ECF 3 Nos. 11, 12.) After briefing on the motion to dismiss was fully complete, on September 4 11, 2024 and September 13, 2024, Plaintiff filed two sur-replies without leave of court. 5 (ECF Nos. 13, 14.) 6 II. LEGAL STANDARDS 7 A claim may be dismissed because of the plaintiff’s “failure to state a claim upon 8 which relief can be granted.” Fed. R. Civ. P. 12(b)(6). A complaint fails to state a claim if 9 it either lacks a cognizable legal theory or sufficient facts to support a cognizable legal 10 theory. Mollett v. Netflix, Inc., 795 F.3d 1062, 1065 (9th Cir. 2015). To state a claim on 11 which relief may be granted, the plaintiff must allege enough facts “to state a claim to 12 relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 13 (2007). “A claim has facial plausibility when the plaintiff pleads factual content that allows 14 the court to draw the reasonable inference that the defendant is liable for the misconduct 15 alleged.” Ashcroft v. Iqbal, 556 U.S. 678 (2009). When considering whether a claim has 16 been stated, the court must accept the well-pleaded factual allegations as true and 17 construe the complaint in the light most favorable to the non-moving party. Id. However, 18 the court is not required to accept as true conclusory factual allegations contradicted by 19 documents referenced in the complaint, or legal conclusions merely because they are 20 cast in the form of factual allegations. Paulsen, 559 F.3d at 1071. 21 When reviewing a motion to dismiss, courts may consider undisputed facts 22 contained in judicially noticeable documents under Federal Rule of Evidence 201 without 23 converting the motion to one for summary judgment. United States v. Ritchie, 342 F.3d 24 903, 908 (9th Cir. 2003). This includes undisputed facts from documents attached to the 25 complaint or those on which the complaint “necessarily relies.” Marder v. Lopez, 450 26 F.3d 445, 448 (9th Cir. 2006); see Harris v. Cnty. of Orange, 682 F.3d 1126, 1132 (9th 27 Cir. 2012) (approving judicial notice of documents from judicial proceedings); Gamboa v. 28 Tr. Corps., 2009 WL 656285, at *3 (N.D. Cal. Mar. 12, 2009) (taking judicial notice of 1 recorded documents related to a foreclosure sale, including grant deed and deed of 2 trust, as they were “part of the public record and [] easily verifiable”). 3 Pro se pleadings are to be liberally construed and afforded the benefit of any 4 doubt. Chambers v. Herrera, 78 F.4th 1100, 1104 (9th Cir. 2023). Upon dismissal of any 5 claims, the court must tell a pro se plaintiff of a pleading’s deficiencies and provide an 6 opportunity to cure such defects. Garity v. APWU Nat'l Lab. Org., 828 F.3d 848, 854 (9th 7 Cir. 2016). However, if amendment would be futile, no leave to amend need be given. 8 Lathus v. City of Huntington Beach, 56 F.4th 1238, 1243 (9th Cir. 2023). 9 To determine the propriety of a dismissal motion, the court may not consider facts 10 raised outside the complaint (such as in an opposition brief), but it may consider such 11 facts when deciding whether to grant leave to amend. Broam v. Bogan, 320 F.3d 1023, 12 1026 n.2 (9th Cir. 2003). 13 III. DISCUSSION 14 Defendant moves to dismiss the Complaint as duplicative of Plaintiff’s prior action, 15 Love I. Def. Mot. Because Plaintiff’s Complaint is duplicative of Love I, the Court will 16 recommend dismissal of the Complaint without leave to amend. Additionally, the Court 17 finds sua sponte that this action is also barred by the doctrine of res judicata. 18 Prior to addressing these grounds for dismissal, the Court will first address 19 Plaintiff’s sur-replies and Defendant’s request for judicial notice. 20 A. Plaintiff’s Sur-Replies 21 Plaintiff filed two sur-replies on September 11, 2024 and September 13, 2024, 22 which appear to be identical to each other. See ECF Nos. 13, 14. Plaintiff did not seek or 23 receive leave of court to file a sur-reply. A plaintiff does not have a right to file a sur-reply 24 under the Local Rules or the Federal Rules of Civil Procedure. See E.D. Cal. Local Rule 25 230(m). In addition, Defendant’s reply did not raise any new arguments or evidence that 26 would justify granting a request to file a sur-reply. The Court therefore declines to 27 consider Plaintiff’s sur-replies. 28 / / / 1 B. Request for Judicial Notice 2 Defendant requests the Court take judicial notice of eleven (11) exhibits. (ECF 3 No. 5-2.) Plaintiff did not oppose the request. Defendant’s request consists of court 4 records from Love I (Exhs. 1-6); recorded documents including a deed of trust, grant 5 deed, and assignment and transfer of deed of trust of the Subject Property (Exhs. 7, 8, 6 11); the Federal Deposit Insurance Corporation’s (FDIC) webpage for the Citizens Bank 7 of Northern California, Nevada City, CA (Exh. 9); and a purchase agreement between 8 FDIC and Defendant of Citizens Bank of Northern California (Exh. 10). The request is 9 granted in part. “The court may judicially notice a fact that is not subject to reasonable 10 dispute because it ... can be accurately and readily determined from sources whose 11 accuracy cannot reasonably be questioned.” Fed. R. Evid. 201(b)(c). The court records 12 and recorded documents (Exhs. 1-8, 11) are proper subjects of judicial notice. In the 13 Ninth Circuit, “court filings and other matters of public record” are sources whose 14 accuracy cannot reasonably be questioned for the purposes of Rule 201 of the Federal 15 Rules of Evidence. Reyn's Pasta Bella, LLC v. Visa USA, Inc., 442 F.3d 741, 746 n.6 16 (9th Cir. 2006); see also Gamboa, 2009 WL 656285, at *3. 17 As to the webpage and loan agreement (Exhs. 9 and 10), the Court declines to 18 grant Defendant’s request because these documents are not relevant to the resolution of 19 the issues before the Court. See Gerritsen v. Warner Bros. Ent. Inc., 112 F. Supp. 3d 20 1011, 1030 (C.D. Cal. 2015) (denying judicial notice of information in press releases and 21 publicly available news articles because it was irrelevant for purposes of the motion to 22 dismiss). 23 C. Duplicative Suits 24 A district court has broad discretion to control its own docket, including the power 25 to dismiss duplicative claims. M.M. v. Lafayette Sch. Dist., 681 F.3d 1082, 1091 (9th Cir. 26 2012). “To determine whether a suit is duplicative, we borrow from the test for claim 27 preclusion.” Adams v. California Dep't of Health Servs., 487 F.3d 684, 688 (9th Cir. 28 2007) (overruled on other grounds by Taylor v. Sturgell, 553 U.S. 880 (2008)). In 1 assessing whether a suit is duplicative, the court examines whether the causes of action, 2 the relief sought, and the parties or privies to the action, are the same. Id. at 689. To 3 determine whether the causes of action are the same, courts utilize the “transaction test” 4 which requires the application of four factors, the last of which is the most important: 5 (1) whether rights or interests established in the prior judgment would be destroyed or impaired by prosecution of 6 the second action; (2) whether substantially the same evidence is presented in the two actions; (3) whether the two 7 suits involve infringement of the same right; and (4) whether the two suits arise out of the same transactional nucleus of 8 facts.

9 10 Id. (citing Costantini v. Trans World Airlines, 681 F.2d 1199, 1201-02 (9th Cir. 1982)). 11 Defendant argues both actions here involve the same parties, allege the same 12 causes of action and seek the same relief. Def. Mot. at 6. Specifically, Defendant argues 13 both actions stem from “the same transactional nucleus of facts and involve the same 14 infringement of the same right (i.e. [Defendant’s] ability to collect the Loan and foreclose 15 on the [Subject] Property).” Id. at 7. Additionally, Defendant argues both actions seek to 16 extinguish and cancel Plaintiff’s obligations as to the Subject Property’s loan documents. 17 Id. In her opposition, Plaintiff argues that “[w]hile the subject property, parties, and some 18 underlying facts may overlap with earlier proceedings,” the Complaint in this action 19 introduces new issues that were not previously addressed in the prior action, including 20 claims for elder abuse and attorney negligence. Pl. Opp’n at 2, 29-32 (ECF No. 11). 21 Here, all the factors of the transaction test are satisfied. See Costantini, 681 F.2d 22 at 1201-02. In both actions, the parties are identical, and Defendant is the same named 23 defendant as in Love I. Compare Compl., with Love I Compl., 2:22-cv-01761-TLN-CKD, 24 ECF No. 1. Most importantly, both actions allege claims stemming from Plaintiff’s loan 25 modification requests and foreclosure proceedings of the same real property that took 26 place between 2018 and 2022 and therefore consequently involve substantially the 27 same evidence. In Love I, Plaintiff’s claims centered on Plaintiff’s attempts to secure a 28 1 loan modification with Defendant due to her inability to maintain her mortgage payments, 2 Defendant’s issuance of a 1099-C form as to its loan in September 2018, the impact of 3 Defendant’s inaccurate credit reporting on Plaintiff’s credit score, Defendant’s attempts 4 to demand payment on the loan despite its cancellation of the debt, and the foreclosure 5 proceedings on the Subject Property. Specifically, in her first action, Plaintiff raised the 6 following claims: (1) violation of the Real Estate Settlement Procedures Act; (2) violation 7 of the California Consumer Credit Reporting Agencies Act; (3) violation of Cal. Civ. Code 8 § 2924; (4) cancellation of recorded instruments; (5) violation of California Business and 9 Professions Code § 17200; (6) negligence; and (7) declaratory relief. See Love I Compl., 10 2:22-cv-01761-TLN-CKD, ECF No. 1 ¶¶ 49-105. Although Plaintiff now seeks to include 11 additional claims, such as a claim for elder abuse and attorney negligence, it is clear that 12 both actions share a common set of facts, impacting the same rights and requested 13 relief, thereby rendering this action duplicative of Plaintiff’s prior action. Moreover, by 14 Plaintiff’s own admission, Love I sought the same relief being sought in this action. See 15 Compl. ¶ 23 (Love I “was a direct response to the continuous denial of loan modification 16 requests and the unethical treatment Plaintiff received. The complaint aimed to hold 17 Defendant accountable for their actions and seek relief for the distress and financial 18 harm caused to Plaintiff.”) Also, because Love I was dismissed for failure to prosecute 19 on May 3, 2024, and judgment entered, if this case were to proceed, Defendant would 20 be deprived of that judgment and have to defend this action involving substantially the 21 same transaction facts, rights, and requested relief. See Love I, 2:22-cv-01761-TLN- 22 CKD, ECF Nos. 36, 37. Because this case is duplicative of Love I, the Court 23 recommends granting Defendant’s motion to dismiss without leave to amend. See 24 Lathus, 56 F.4th at 1243. 25 D. Res Judicata 26 “The doctrine of res judicata provides that a final judgment on the merits bars 27 further claims by parties or their privies based on the same cause of action.” Tahoe- 28 Sierra Pres. Council, Inc. v. Tahoe Reg'l Plan. Agency, 322 F.3d 1064, 1077 (9th Cir. 1 2003) (internal quotation marks and citation omitted). The doctrine of res judicata, also 2 known as claim preclusion, is applicable when there is (1) an identity of claims; (2) a final 3 judgment on the merits; and (3) identity or privity between parties. Owens v. Kaiser 4 Found. Health Plan, Inc., 244 F.3d 708, 713 (9th Cir. 2001). A court may sua sponte 5 dismiss an action based on the doctrine of res judicata, even though the doctrine is 6 normally raised as an affirmative defense. Arizona v. California, 530 U.S. 392, 412 7 (2000). 8 There is no dispute regarding the identity of the parties because Plaintiff and 9 Defendant are the same parties in both actions. Although there is a difference in the 10 claims alleged in the two actions, the two actions arise out of the same “transactional 11 nucleus of facts” and make almost identical factual allegations relating to the crux of the 12 issue which relates to the loan modification requests and foreclosure proceedings as to 13 the real property located at 13312 Thistle Loop Road, Penn Valley, CA, 95046. See 14 Constantini, 681 F.2d at 1201-02. Moreover, the judgment entered in Love I, clearly 15 constitutes a final judgment on the merits. In Love I, the action was dismissed pursuant 16 to Federal Rules of Civil Procedure 41(b) for failure to prosecute. See Love I, 2:22-cv- 17 01761-TLN-CKD, ECF Nos. 36, 37. Plaintiff then appealed to the Ninth Circuit Court of 18 Appeals, where the appeal is still pending. See Love I, 2:22-cv-01761-TLN-CKD, ECF 19 Nos. 38, 39, 40. Because Love I was dismissed with prejudice, the dismissal was an 20 adjudication on the merits for purposes of res judicata despite the pending appeal in 21 Love I. See Owens, 244 F.3d at 714 (dismissal of prior action with prejudice based on 22 plaintiff’s failure to prosecute under Rule 41(b) was an “adjudication on the merits” for 23 purposes of res judicata); Sosa v. DIRECTV, Inc., 437 F.3d 923, 928 (9th Cir. 2006) (“in 24 federal courts, a district court judgment is final for purposes of res judicata…This is so 25 even during the pendency of an appeal.”) (internal quotation marks and citation omitted). 26 Accordingly, the Court recommends this action also be dismissed without leave to 27 amend based on the doctrine of res judicata. 28 / / / 1 | IV. CONCLUSION 2 Based upon the findings above, it is HEREBY RECOMMENDED that: 3 1. Defendant's motion to dismiss (ECF No. 5) be GRANTED; 4 2. Plaintiffs Complaint (ECF No. 1) be DISMISSED without leave to amend; 5 and 6 3. The Clerk of the Court be directed to CLOSE this case. 7 These findings and recommendations are submitted to the United States District 8 || Judge assigned to the case, pursuant to the provisions of 28 U.S.C. § 636(b)(1). Within 9 | 14 days after being served with these findings and recommendations, any party may file 10 | written objections with the Court and serve a copy on all parties. This document should 11 | be captioned “Objections to Magistrate Judge’s Findings and Recommendations.” Any 12 | reply to the objections shall be served on all parties and filed with the Court within 14 13 | days after service of the objections. Failure to file objections within the specified time 14 | may waive the right to appeal the District Court's order. Turner v. Duncan, 158 F.3d 449, 15 | 455 (9th Cir. 1998); Martinez v. Yist, 951 F.2d 1153, 1156-57 (9th Cir. 1991). 16 17 | Dated: February 7, 2025 Cc (i $ □□ 18 CHI SOO KIM 49 UNITED STATES MAGISTRATE JUDGE 20 || 4, love1823.24 21 22 23 24 25 26 27 28 11