Shirley Piatt et al v. The Money Store et al, No. 2:2018cv01291 - Document 60 (C.D. Cal. 2019)
Court Description: ORDER GRANTING DEFENDANTS MOTION TO DISMISS SECOND AMENDED COMPLAINT WITH PREJUDICE 50 . The parties shall confer and submit a proposed judgment for the Courts review within 7 days of this Order by Judge Otis D. Wright, II . (lc). Modified on 5/28/2019 (lc).
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Shirley Piatt et al v. The Money Store et al Doc. 60 O 1 2 3 4 5 6 7 8 United States District Court Central District of California 9 10 11 12 13 14 15 16 17 18 DARRELL ASBERRY, MICHAEL F. Case 2:18-CV-01291-ODW (PLAx) CORDES, SHIRLEY PIATT, on behalf of themselves and all others similarly situated, ORDER GRANTING DEFENDANTS’ MOTION TO Plaintiffs, DISMISS SECOND AMENDED COMPLAINT [50] v. THE MONEY STORE, TMS MORTGAGE, INC., HOMEQ SERVICING CORP., WELLS FARGO BANK, N.A., Defendants. 19 I. 20 INTRODUCTION This matter comes before the Court on Defendants’ Motion to Dismiss 21 22 Plaintiffs’ Second Amended Class Action Complaint (“Motion”). (Mot., ECF 23 No. 50.) After reviewing the materials submitted by the parties in connection with the 24 Motion, the Court GRANTS Defendants’ Motion. (ECF No. 50.)1 25 26 27 28 1 After considering the papers filed in connection with the Motion, the Court deemed the matter appropriate for decision without oral argument. Fed. R. Civ. P. 78(b); C.D. Cal. L.R. 7-15. Dockets.Justia.com II. 1 BACKGROUND 2 This action follows a jury trial, a subsequent Second Circuit appeal, and an 3 unsuccessful Petition for Certiorari to the United States Supreme Court, involving the 4 same subclasses, the same defendants, and similarly situated plaintiffs. 5 Granting, In Part, Defs.’ Mot. to Dismiss (“Order”) 3–6, ECF No. 41. (discussing the 6 history of the first action, Mazzei v. The Money Store (“Mazzei Action”), No. 01-cv- 7 5684 (JGK) (S.D.N.Y. filed June 22, 2001).) (Order 8 The Court addressed the extensive history and factual allegations in its August 9 8, 2018, Order, and incorporates that discussion here by reference. (Order 3–8.) 10 Darrel Asberry, Michael F. Cordes, and Shirley Piatt brought this putative class action 11 on behalf of themselves and two subclasses seeking damages for allegedly fraudulent 12 lending practices by The Money Store, TMS Mortgage, Inc., HomEq Servicing Corp., 13 and Wells Fargo Bank, N.A. (“Defendants”). 14 (“FAC”), ECF No. 13.) (See generally First Am. Compl. 15 On August 8, 2018, the Court granted, in part, Defendants’ motion to dismiss 16 Plaintiffs’ FAC. (See Order 2, 18.) The Court found the Fee-Split Class II2 claims 17 barred by res judicata and Late Fee Class II claims barred by the applicable statute of 18 limitation, absent some form of tolling. (Order 12, 14.) The Court found tolling 19 unavailable under American Pipe & Construction Co. v. Utah (“American Pipe”), 414 20 U.S. 538 (1974), but possibly available for California residents under California’s 21 equitable tolling laws. (Order 14–17.) Accordingly, the Court dismissed the Fee-Split 22 Class II claims, the Late Fee Class II claims of non-California residents, and the 23 individual claims of Shirley Piatt, a non-California resident, without leave to amend. 24 (Order 18–19.) The Court granted limited leave to amend to Asberry, Cordes, and the 25 California members of the Late Fee Class II, only to the extent they could “allege 26 additional facts that would bring their claims within the reach of California’s equitable 27 28 2 Plaintiffs sought to certify two classes: The Fee-Split Class II and the Late Fee Class II, as defined in Plaintiffs’ FAC. (See FAC ¶ 19; Order 7–8.) 2 1 tolling laws.” (Order 18.) The Court subsequently denied Asberry, Cordes, and 2 Piatt’s motion for reconsideration. (Order Denying Recons. & Leave to Add New 3 Cause of Action, ECF No. 54.) 4 Asberry and Cordes (“Plaintiffs”) filed a Second Amended Class Action 5 Complaint asserting four causes of action3 and alleging that their claims should be 6 tolled pursuant to American Pipe and California’s equitable tolling doctrine. (See 7 Second Am. Class Action Compl. (“SAC”) ¶¶ 130, 136, 146, 152, ECF No. 42.) In 8 addition to equitable tolling, Plaintiffs allege new theories to bar the application of the 9 statute of limitations to their Late Fee Class II claims, including fraudulent 10 concealment, equitable estoppel, and the discovery rule. (See SAC ¶¶ 131, 133, 147, 11 149; Opp’n to Mot. (“Opp’n”) 14–20, ECF No. 52.) Plaintiffs also allege new claims 12 of other improper fees charged by Defendants. (See Opp’n 9, 18.) III. 13 LEGAL STANDARD 14 Dismissal under Rule 12(b)(6) “can be based on the lack of a cognizable legal 15 theory or the absence of sufficient facts alleged under a cognizable legal theory.” 16 Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1990). “To survive a 17 motion to dismiss . . . under Rule 12(b)(6), a complaint generally must satisfy only the 18 minimal notice pleading requirements of Rule 8(a)(2)”—a short and plain statement of 19 the claim. Porter v. Jones, 319 F.3d 483, 494 (9th Cir. 2003); see also Fed. R. Civ. P. 20 8(a)(2). The “[f]actual allegations must be enough to raise a right to relief above the 21 speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). The 22 “complaint must contain sufficient factual matter, accepted as true, to state a claim to 23 relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) 24 (internal quotation marks omitted). “A pleading that offers ‘labels and conclusions’ or 25 26 27 28 Plaintiffs’ Late Fee Class II claims include breach of contract, breach of the covenant of good faith and fair dealing, “restitution to avoid unjust enrichment,” which the Court construed as a claim in quasi-contract seeking restitution, and fraud. (See generally SAC; Order 1, 13.) 3 3 1 ‘a formulaic recitation of the elements of a cause of action will not do.’” Id. (citing 2 Twombly, 550 U.S. at 555). 3 Whether a complaint satisfies the plausibility standard is “a context-specific 4 task that requires the reviewing court to draw on its judicial experience and common 5 sense.” Id. at 679. A court is generally limited to the pleadings and must construe 6 “[a]ll factual allegations set forth in the complaint . . . as true and . . . in the light most 7 favorable to [the plaintiff].” Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir. 8 2001). 9 deductions of fact, and unreasonable inferences. Sprewell v. Golden State Warriors, 10 But a court need not blindly accept conclusory allegations, unwarranted 266 F.3d 979, 988 (9th Cir. 2001). 11 Accusations of fraud require a heightened particularity in pleading. See Fed. R. 12 Civ. P. 9(b). The “circumstances” required by Rule 9(b) are the “who, what, when, 13 where, and how” of the fraudulent activity. United States ex rel. Cafasso v. Gen. 14 Dynamics C4 Sys., Inc., 637 F.3d 1047, 1055 (9th Cir. 2011) (internal quotation marks 15 omitted). In addition, the allegation must set forth “what is false or misleading about 16 [a] statement, and why it is false.” Id. (internal quotation marks omitted). This 17 heightened pleading standard ensures that “allegations of fraud are specific enough to 18 give defendants notice of the particular misconduct which is alleged to constitute the 19 fraud charged so that they can defend against the charge and not just deny that they 20 have done anything wrong.” Semegen v. Weidner, 780 F.2d 727, 731 (9th Cir. 1985). 21 IV. DISCUSSION 22 Defendants move to dismiss Plaintiffs’ SAC, arguing that Plaintiffs’ claims are 23 time-barred because no tolling theory applies, Plaintiffs improperly amended the SAC 24 to include claims and theories beyond the scope of the limited amendment, and 25 Plaintiffs failed to adequately plead each cause of action asserted, as required by Rules 26 12(b)(6) and 9(b). (See generally Mot.) 27 28 4 1 A. Tolling 2 As discussed in the Court’s previous Order, Plaintiffs’ Late Fee Class II claims 3 are governed by, at most, a four-year statute of limitations (breach of contract) and, at 4 least, a two-year statute of limitations (unjust enrichment construed as quasi-contract). 5 (Order 13–14.) Plaintiffs Cordes and Asberry allege they were charged improper late 6 fees in 2005 and 2006. (SAC ¶¶ 120, 125, 144.) Thus, the statute of limitations on 7 their claims expired as early as 2007 or as late as 2010. As Plaintiffs filed their initial 8 complaint in this action on February 16, 2018, their Late Fee Class II claims are 9 barred by the statute of limitations absent some form of tolling. (See Compl., ECF 10 No. 1.) 11 In opposition to Defendants’ prior motion to dismiss, Plaintiffs argued that their 12 claims should be tolled pursuant to American Pipe or California’s equitable tolling 13 doctrine. (Order 14.) The Court found that American Pipe tolling did not apply. 14 (Order 17.) The Court further found that Plaintiffs had failed to plead sufficient 15 factual allegations supporting California’s equitable tolling doctrine and granted 16 Plaintiffs leave to amend to “allege additional facts that would bring their claims 17 within the reach of California’s equitable tolling laws.” (Order 17, 18.) 18 1. American Pipe Tolling & Fierro v. Landry’s Restaurant, Inc. 19 After all briefing on Defendants’ Motion was completed, the California Court 20 of Appeals issued its opinion in Fierro v. Landry’s Restaurant, Inc., 32 Cal. App. 5th 21 276 (2019).4 In Fierro, an employee brought a time-barred putative class action 22 against his employer, alleging that a prior class action tolled the statute of limitations 23 as to his class and individual claims. Id. at 284. The California Court of Appeals 24 discussed the United States Supreme Court decision China Agritech v. Resh, 138 S. 25 Ct. 1800 (2018), which held that American Pipe tolling does not allow a time-barred 26 successive class action. Id. at 291–93. The California Court of Appeals expressly 27 28 4 Defendants notified the Court of the Fierro decision and Plaintiffs responded. (Defs.’ Notice of Suppl. Authority, ECF No. 58; Pls.’ Resp., ECF No. 59.) 5 1 adopted the reasoning and policy of Resh and concluded that, “[a]s in federal court, in 2 California, ‘American Pipe does not permit the maintenance of a follow-on class 3 action past expiration of the statute of limitations.’” Id. at 297 (quoting Resh, 138 S. 4 Ct. at 1804).5 5 The court in Fierro appears to adopt American Pipe tolling as the exclusive 6 tolling principle for class action tolling under California law. See id. at 294 (“Nothing 7 under California law suggests such an exception to the application of a statute of 8 limitations for a class claim . . . . [T]here is no basis under California law for 9 potentially unlimited tolling of statutes of limitations applicable to class action 10 claims.”). Accordingly, per Fierro, California’s equitable tolling doctrine is not 11 available to Plaintiffs’ claims. 12 considers whether Plaintiffs’ amended allegations sufficiently support equitable 13 tolling. However, in an abundance of caution, the Court 14 2. California’s Equitable Tolling Doctrine 15 The Court granted Plaintiffs limited leave to amend to the extent they could 16 allege facts supporting California’s equitable tolling doctrine. (Order 14–18.) 17 Specifically, the Court directed that “Plaintiffs must allege facts addressing the lack of 18 prejudice to Defendants, and Plaintiffs’ goodwill and reasonableness in pursuing this 19 action.” (Order 18.) Even were California’s equitable tolling doctrine available to toll 20 Plaintiffs’ time-barred class or individual claims post-Fierro, Plaintiffs have failed to 21 set forth specific factual allegations sufficient to meet their burden. 22 23 24 25 26 27 28 5 American Pipe tolling prohibits successive class claims, but preserves individual claims. Fierro, 32 Cal. App. 5th at 290–91, 293 (“American Pipe tolling does not apply to any later class claims,” and “only the applicable statutes of limitations for the unnamed class members to assert their individual claims are tolled.”). However, American Pipe does not apply cross-jurisdictionally. See Clemens v. DaimlerChrysler Corp., 534 F.3d 1017, 1025 (9th Cir. 2008) (declining to import crossjurisdictional tolling into California law); see also Hatfield v. Halifax, PLC, 564 F.3d 1177, 1188 (9th Cir. 2009) (applying Clemens as rejecting American Pipe tolling in a cross-jurisdictional action). The court in Fierro considered two California class actions; as such, nothing in Fierro endorsed cross-jurisdictional tolling. Accordingly, Plaintiffs’ individual claims are also not saved by American Pipe. 6 1 Equitable tolling is a judicially created doctrine in California that seeks to 2 preserve a plaintiff’s claims and extend the statute of limitations where the plaintiff 3 pursues one out of several possible legal theories. See J.M. v. Huntington Beach 4 Union High Sch. Dist., 2 Cal. 5th 648, 657 (2017). Plaintiffs seeking the benefit of 5 the equitable tolling doctrine must show: (1) timely notice to the defendant during the 6 statutory period; (2) lack of prejudice to the defendant in gathering and preserving 7 evidence; and (3) the plaintiff’s reasonableness and good faith in pursuing the claim in 8 a different forum. See Hopkins v. Kedzierski, 225 Cal. App. 4th 736, 747 (2014) 9 (quoting McDonald v. Antelope Valley Cmty. Coll. Dist., 45 Cal. 4th 88, 102 (2008)). 10 Courts must balance the injustice to the plaintiff of barring her claim against the 11 “effect upon the important public interest or policy expressed by the . . . limitations 12 statute.” Hatfield, 564 F.3d 1177, 1186 (quoting Lantzy v. Centex Homes, 31 Cal. 4th 13 363, 371 (2003)). 14 Regarding Cordes’s Late Fee claims, Plaintiffs allege: 15 Mr. Cordes[’s] claims regarding the assessment of postacceleration late fees are subject to equitable tolling under California law. Cordes proceeded reasonably and in good faith in relying on the late fee class certified in Mazzei to protect his interests. Moreover, Defendants cannot show the type of “unfair prejudice” necessary to preclude equitable tolling, as the same claims were raised in Mazzei, allowing the Defendants to investigate the claims and preserve the relevant evidence. 16 17 18 19 20 21 (SAC ¶ 130.) Regarding Asberry’s Late Fee claims, Plaintiffs allege: 26 Mr. Asberry’s claims regarding the assessment of post-acceleration late fees are subject to equitable tolling under California law. Asberry proceeded reasonably and in good faith in relying on the late fee class certified in Mazzei to protect his interests. Moreover, Defendants cannot show the type of “unfair prejudice” necessary to preclude equitable tolling, as the same claims were raised in Mazzei, allowing the Defendants to investigate the claims and preserve the relevant evidence. 27 (SAC ¶ 146.) This is the extent of Plaintiffs’ amended allegations supporting the lack 28 of prejudice to Defendants or good faith and reasonableness on the part of Plaintiffs 22 23 24 25 7 1 concerning their Late Fee Class II claims. Plaintiffs point to no other allegations 2 supporting equitable tolling. (See Opp’n 12–13.) Even accepting the allegations as 3 true, they provide nothing more than a conclusory, boilerplate reiteration of the 4 elements and fail to adequately support the application of equitable tolling. 5 Further, Plaintiffs contend that Defendants are not prejudiced by having to 6 relitigate here because Plaintiffs’ claims are based on the same facts as the Mazzei 7 action. (Opp’n 12–13.) This is true to an extent that Defendants had notice of the late 8 fee claims and the opportunity to gather evidence. However, Plaintiffs ignore that 9 they bring additional claims not previously litigated or that the facts and issues that 10 were previously litigated were decided and affirmed against Plaintiffs. Requiring 11 Defendants to relitigate a decade-long class action previously resolved and affirmed 12 on appeal would be prejudicial to Defendants. See In re Phenylpropanolamine (PPA) 13 Prods. Liab. Litig., 460 F.3d 1217, 1228 (9th Cir. 2006) (discussing that prejudice 14 normally consists of lost evidence or memories, but may also consist of the costs and 15 burdens of litigation). 16 Plaintiffs also argue they have acted reasonably and in good faith in bringing 17 their claims, warranting application of equitable tolling. (Opp’n 13.) But Plaintiffs 18 paid off their accounts in 2005 and 2006, yet fail to allege that they ever inquired 19 about the fees charged, even after receiving the Mazzei Action class notice in 2013. 20 (SAC ¶¶ 120, 125, 133, 144, 149.) To compare, in the Mazzei Action, Mr. Mazzei 21 paid off his loan in October 2000 and inquired about the fees in January 2001. (SAC 22 ¶¶ 26–27.) 23 Further, Plaintiffs allege that it was not until the Mazzei Action had been 24 pursued for fifteen years, after the jury trial, after decertification, and after the Second 25 Circuit’s affirmance, that counsel “began the task of determining whether a Late Fee 26 or Split Fee subclass could be certified.” 27 counsel in the Mazzei Action, rehired the same expert retained during the Mazzei 28 Action to reanalyze the same databases and documents analyzed during the Mazzei 8 (SAC ¶ 93.) Plaintiffs’ counsel, also 1 Action. (SAC ¶¶ 93–95.) Thus, despite using the same experts to reanalyze the same 2 databases and documents, Plaintiffs now claim they were unable to conduct this 3 investigation until after the Mazzei Action concluded. 4 support the position that Plaintiffs acted reasonably or in good faith in bringing the 5 present action. These allegations do not 6 Finally, the Late-Fee Class in Mazzei was decertified, in part, for failure to 7 establish class-wide privity, which made a class action an inappropriate vehicle to 8 resolve the plaintiffs’ claims. Mazzei v. The Money Store, 308 F.R.D. 92 (S.D.N.Y. 9 2015), aff’d, 829 F.3d 260 (2d Cir. 2016). Here, Plaintiffs’ SAC again expresses their 10 dissatisfaction and disdain for the Southern District of New York court’s rulings in 11 Mazzei, emphasizing that this action is yet another attempt to relitigate the 12 unfavorable rulings and outcome. (See SAC ¶¶ 23–92.) This is precisely the kind of 13 purpose for which tolling should not be used. Hatfield, 564 F.3d at 1189 n.8; Moore 14 v. Wachovia Sec., LLC, No. CV 09-9071, 2010 WL 1437923, at *4 (C.D. Cal. Mar. 15 15, 2010) (citing Catholic Social Servs., Inc. v. I.N.S., 232 F.3d 1139 (9th Cir. 2000)) 16 (“[T]he filing of an earlier class action does not toll the statute of limitations when the 17 second action is no more than an attempt to relitigate the correctness of the earlier 18 class certification decision.”). 19 Plaintiffs have failed to assert factual allegations sufficient to meet their burden 20 to establish that application of California’s equitable tolling doctrine is appropriate. 21 Accordingly, the Court finds that equitable tolling is not available to the class or 22 individual claims. 23 Defendants’ Motion to Dismiss Plaintiffs’ SAC. 24 B. Plaintiffs’ claims are time-barred. The Court GRANTS Plaintiffs’ Additional Arguments 25 Plaintiffs raise the equitable theories of fraudulent concealment, equitable 26 estoppel, and the discovery rule as means to bar application of the statute of 27 limitations to their Late Fee Class II claims. (Opp’n 14–20.) 28 9 1 “[L]ate amendments to assert new theories are not reviewed favorably when the 2 facts and the theory have been known to the party seeking amendment since the 3 inception of the cause of action.” Royal Ins. Co. of Am. v. Sw. Marine, 194 F.3d 1009, 4 1016–17 (9th Cir. 1999) (quoting Acri v. Int’l Assoc. of Machinists & Aerospace 5 Workers, 781 F.2d 1393, 1398 (9th Cir. 1986)). The Court granted limited leave to 6 amend, specifically only as to allegations supporting the elements of California’s 7 equitable tolling doctrine. Accordingly, Plaintiffs’ late-raised theories exceed the 8 scope of permitted amendment. 9 This matter has been pending for over a year, and Plaintiffs have filed two 10 previous complaints and opposed Defendants’ motion to dismiss their FAC, all before 11 raising these theories as a means to preserve their Late Fee Class II claims. Plaintiffs 12 were aware of these theories when filing their FAC because Plaintiffs assert no newly 13 discovered facts in raising them now. Further, Plaintiffs raised these theories to 14 oppose Defendants’ motion to dismiss the FAC, but only specifically to defend the 15 Split-Fee Class II claims, which the Court found were barred by res judicata. (Order 16 9–12.) Thus, the Court can only conclude that Plaintiffs made a strategic choice not to 17 raise these theories to preserve the Late Fee Class II claims at an earlier time. See 18 Lizza v. Deutsche Bank Nat’l Tr. Co., 714 F. App’x 620, 623 (9th Cir. 2017) (finding 19 that the district court did not abuse its discretion in striking Second Amended 20 Complaint for exceeding the scope of amendment permitted); Acri, 781 F.2d at 1398– 21 99 (finding that the district court did not abuse its discretion in denying leave to 22 amend where the plaintiffs’ attorney made “a tactical choice” not to raise a theory of 23 liability earlier). 24 Finally, even were Plaintiffs’ late-raised theories permitted, Plaintiffs fail to set 25 forth sufficient allegations to support the application of these theories. Plaintiffs fail 26 to allege that any of the alleged misrepresentations dissuaded or otherwise prevented 27 Plaintiffs from bringing this action. See Bernson v. Browning–Ferris Indus. of Cal., 28 Inc., 7 Cal. 4th 926, 931 n.3 (1994) (“The rule of fraudulent concealment is applicable 10 1 whenever the defendant intentionally prevents the plaintiff from instituting suit . . . .”). 2 Similarly, Plaintiffs fail to allege their own due diligence, that the inquiries supporting 3 their claims were not available to them upon pay-off in 2005 and 2006, or that they 4 investigated the claims. See Jolly v. Eli Lilly & Co., 44 Cal. 3d 1103, 1109, 1111 5 (1988) (“A plaintiff is ‘held to her actual knowledge as well as knowledge that could 6 reasonably be discovered through investigation of sources open to her.’”) For these reasons, fraudulent concealment, equitable estoppel, and the 7 8 discovery rule do not save Plaintiffs’ time-barred claims. 9 C. Leave to Amend 10 As a general rule, leave to amend a complaint which has been dismissed should 11 be freely granted. Fed. R. Civ. P. 15(a). However, leave to amend may be denied 12 when “the court determines that the allegation of other facts consistent with the 13 challenged pleading could not possibly cure the deficiency.” Schreiber Distrib. Co. v. 14 Serv-Well Furniture Co., 806 F.2d 1393, 1401 (9th Cir. 1986); see Lopez v. Smith, 203 15 F.3d 1122, 1127 (9th Cir. 2000). 16 Plaintiffs have previously amended their Complaint in this action twice, most 17 recently with specific direction from the Court as to its insufficiencies. The facts and 18 issues arise from the Mazzei litigation, a case spanning more than fifteen years, and 19 from facts known to Plaintiffs Cordes and Asberry since 2005 and 2006. The facts 20 and theories of liability in this matter have been developed and honed over a 21 significant amount of time. The Court previously informed Plaintiffs’ of the existing 22 pleading deficiencies, yet Plaintiffs have failed again to assert factual allegations 23 sufficient to support the application of California’s equitable tolling doctrine. Thus, 24 the Court finds that “allegation of other facts consistent with the [SAC] could not 25 possibly cure the deficiency.” Nor do Plaintiffs request leave to amend. According, 26 leave to amend is DENIED. 27 28 11 V. 1 CONCLUSION 2 For the reasons discussed above, the Court GRANTS Defendants’ Motion to 3 Dismiss Plaintiffs’ Second Amended Class Action Complaint WITH PREJUDICE. 4 (ECF No. 50.) The parties shall confer and submit a proposed judgment for the 5 Court’s review within 7 days of this Order. 6 7 IT IS SO ORDERED. 8 9 May 28, 2019 10 11 12 13 ____________________________________ OTIS D. WRIGHT, II UNITED STATES DISTRICT JUDGE 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 12
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