Shirley Piatt v. the Money Store

• Court: Court of Appeals for the Ninth Circuit
• Decided: June 12, 2020
• Docket: 19-55780
• Status: Unpublished

Opinion

FILED NOT FOR PUBLICATION JUN 12 2020 UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS

FOR THE NINTH CIRCUIT

SHIRLEY PIATT; et al., No. 19-55780

Plaintiffs-Appellants, D.C. No. 2:18-cv-01291-ODW-PLA v.

THE MONEY STORE; et al., MEMORANDUM*

Defendants-Appellees.

Appeal from the United States District Court for the Central District of California Otis D. Wright II, District Judge, Presiding

Argued and Submitted June 1, 2020 Pasadena, California

Before: RAWLINSON and N.R. SMITH, Circuit Judges, and KORMAN,** District Judge.

Plaintiffs appeal the district court’s dismissal of all of their individual and

putative class claims against Defendants. We have jurisdiction under 28 U.S.C.

§ 1291, and we affirm.

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The Honorable Edward R. Korman, United States District Judge for the Eastern District of New York, sitting by designation. 1. The district court did not err in finding that res judicata barred Plaintiffs’

claims related to the improper collection of attorneys’ fees and expenses. “Basic

principles of res judicata . . . apply” with equal force in the class action context.

Cooper v. Fed. Reserve Bank of Richmond, 467 U.S. 867, 874 (1984). As to the

elements of res judicata, Plaintiffs only contest whether there is “an identity of

claims” between the actions. United States v. Liquidators of European Fed. Credit

Bank, 630 F.3d 1139, 1150 (9th Cir. 2011) (citation omitted).

In determining whether there is an identity of claims, courts most

importantly consider the factor whether the two suits arise out of “the same

transactional nucleus of fact.” Id. at 1151. The “Fee-Split Class” claims in Mazzei

v. Money Store, Inc., 288 F.R.D. 45, 62 (S.D.N.Y. 2012), and Plaintiffs’ claims

related to the collection of improper attorneys’ fees and expenses arise out of the

same transactional nucleus of fact. In both actions, class members sought to

recover damages based on attorneys’ fees improperly charged to borrowers by the

same defendants under the same or similar loan documents, including on the basis

that attorneys’ fees were shared with a non-attorney entity. Because these claims

are related to the same set of facts, they could have been conveniently tried

together in the Mazzei action. See Int’l Union of Operating Eng’rs–Emp’rs Constr.

Indus. Pension, Welfare & Training Tr. Funds v. Karr, 994 F.2d 1426, 1429 (9th

2 Cir. 1993). Thus, the district court correctly found an identity of claims between

Plaintiffs’ individual and putative class claims related to the collection of improper

attorneys’ fees and the jury verdict in Mazzei.

2. Neither equitable tolling nor any other tolling or delayed-accrual theory

saves Plaintiffs’ otherwise time-barred claims related to the payment of post-

acceleration late fees.1 First, California’s equitable tolling doctrine is not available

to toll successive class claims based on a prior class-action suit. See Fierro v.

Landry’s Rest. Inc., 244 Cal. Rptr. 3d 1, 4 (Ct. App. 2019).

Second, Plaintiffs failed to adequately allege facts to support application of

equitable tolling to their individual late-fee claims. For equitable tolling to apply,

Plaintiffs were required to allege facts showing, in part, their “good faith and

reasonable conduct in filing the second claim.” Cervantes v. City of San Diego, 5

F.3d 1273, 1275 (9th Cir. 1993). Plaintiffs’ conclusory allegations that they

“proceeded reasonably and in good faith” by relying on the previously certified

late-fee class in Mazzei, are undermined by other allegations in the Second

1 Plaintiffs argue for the first time on appeal that it is not apparent from the face of the complaint that the statute of limitations on all of the putative class members claims have expired. This argument is waived. See Robinson v. Am. Home Mortg. Servicing, Inc. (In re Mortg. Elec. Registration Sys., Inc.), 754 F.3d 772, 780 (9th Cir. 2014). 3 Amended Complaint (“SAC”) that show Plaintiffs are attempting to relitigate the

merits of the Mazzei action.

Third, the district court correctly determined that Plaintiffs failed to allege

facts sufficient to support the application of the discovery rule. The SAC contains

no allegations demonstrating Plaintiffs’ inability to discover the improper fees

despite the exercise of reasonable diligence. See Fox v. Ethicon Endo-Surgery,

Inc., 110 P.3d 914, 920–21 (Cal. 2005).

Fourth, the district court correctly determined that Plaintiffs failed to

adequately allege facts supporting the application of equitable estoppel. There are

no allegations in the SAC identifying any conduct by Defendants that purportedly

“induced the [P]laintiff[s] to postpone filing the legal action until after the

statute[s] [of limitation] ha[d] run.” Honig v. S.F. Planning Dep’t, 25 Cal. Rptr. 3d

649, 655 (Ct. App. 2005) (citation omitted).

Finally, the district court did not err in finding that Plaintiffs failed to allege

sufficient facts to support application of the fraudulent concealment doctrine. For

fraudulent concealment to apply, a plaintiff must allege facts showing, inter alia,

“that the plaintiff was not at fault for failing to discover [the fraud] or had no actual

or presumptive knowledge of facts sufficient to put him on inquiry.” Baker v.

Beech Aircraft Corp., 114 Cal. Rptr. 171, 175 (Ct. App. 1974). In doing so,

4 Plaintiffs were required (but failed) to allege facts in their SAC showing “that[,] in

the exercise of reasonable diligence[,] the facts could not have been discovered at

an earlier date.” Id.

3. The district court correctly determined that Plaintiffs’ California unfair

competition law (“UCL”) claims were barred by the statute of limitations. To the

extent that the Mazzei action equitably tolled any putative class member’s UCL

claim, any such tolling ceased when the Mazzei court declined to certify the UCL

subclasses in 2012. See Lantzy v. Centex Homes, 73 P.3d 517, 523 (Cal. 2003).

Thus, Plaintiffs’ UCL claims expired no later than 2016. See Cal. Bus. & Prof.

Code § 17208. Because Plaintiffs did not file the instant suit until 2018, Plaintiffs’

UCL claims are time barred.

4. The district court did not abuse its discretion by denying Plaintiffs leave to

amend their late-fee claims where Plaintiffs previously failed to cure defects in

their complaint, see Nat’l Council of La Raza v. Cegavske, 800 F.3d 1032, 1045

(9th Cir. 2015), and Plaintiffs made a strategic choice not to raise their theories of

equitable estoppel, fraudulent concealment, and the discovery rule prior to filing

their SAC, see Acri v. Int’l Ass’n of Machinists & Aerospace Workers, 781 F.2d

1393, 1398 (9th Cir. 1986).

AFFIRMED.