Abuan v. JP Morgan Chase & Co., No. 3:2013cv01315 - Document 14 (S.D. Cal. 2013)
Court Description: ORDER granting 5 Motion to Dismiss with Leave to Amend. Plaintiff may file an amended complaint articulating any claims which arose after discharge on or before October 18, 2013. Signed by Judge M. James Lorenz on 10/3/2013. (sjt)
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Abuan v. JP Morgan Chase & Co. Doc. 14 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 ) ) ) Plaintiff, ) ) v. ) JPMORGAN CHASE & CO. dba CHASE ) HEALTH ADVANCE a Delaware ) Corporation, ) ) Defendant. ) 11 SHANNON ABUAN, Civil No. 13cv1315 L (JMA) 12 ORDER GRANTING DEFENDANT’S MOTION TO DISMISS WITH LEAVE TO AMEND [DOC. 5] 13 14 15 16 17 18 On June 6, 2013, Plaintiff Shannon Abuan commenced this action against Defendant JP 19 Morgan Chase. Defendant now moves to dismiss the Complaint under Federal Rules of Civil 20 Procedure 12(b)(1) and 12(b)(6). Plaintiff opposes. 21 The Court found this motion suitable for determination on the papers submitted and 22 without oral argument. See Civ. L.R. 7.1(d)(1). (Doc. 11.) For the following reasons, the Court 23 GRANTS Defendant’s motion to dismiss WITH LEAVE TO AMEND. 24 // 25 // 26 // 27 // 28 // 13cv1315 Dockets.Justia.com 1 I. BACKGROUND 2 In December 2006, Plaintiff opened a personal credit card account with the Defendant. 3 (Compl. ¶ 11. [Doc. 1].) At some point in 2010, Plaintiff defaulted on that account. (Id. ¶ 12; see 4 also Request for Judicial Notice in Support of Defendant’s Motion to Dismiss, Ex. A at 24.) 5 Following the default, the Defendant attempted to collect payments on the Plaintiff’s debt 6 obligation. (Id. ¶ 13.) 7 On November 15, 2011, Plaintiff filed for Chapter 7 Bankruptcy. (Compl. ¶ 14.) Plaintiff 8 listed a number of debts on Schedule F of the bankruptcy petition, including the $12,039.00 debt 9 owed on her Chase Health credit card account. (Id. ¶ 16; see Request for Judicial Notice in 10 Support of Defendant’s Motion to Dismiss, Ex. A at 24.) After she filed for bankruptcy, the 11 Defendant called her cellular telephone at least eighteen times between December 16, 2011 and 12 December 6, 2012, giving rise to Plaintiff’s claims in this action. (Id. ¶¶ 14, 15, 19.) Plaintiff 13 received a discharge of her debts from the bankruptcy court on February 23, 2012 and her case 14 was closed on February 27, 2012. (Id. ¶ 14.) 15 On June 6, 2013, Plaintiff commenced this action. The Complaint asserts the following 16 four claims: (1) violations of the Telephone Consumer Protection Act (“TCPA”), 47 U.S.C. § 17 227, et seq.; (2) violations of the Rosenthal Fair Debt Collection Practices Act (“RFDCPA”), 18 Cal. Civ. Code § 1788, et seq.; (3) violations of the automatic stay, 11 U.S.C. § 362, et seq.; and 19 (4) violations of the discharge injunction, 11 U.S.C. § 524, et seq. All of Plaintiff’s claims are 20 based on Defendant’s phone calls to her cellular phone. Defendant now moves to dismiss the 21 complaint on the basis of judicial estoppel and Plaintiff’s failure to adequately plead any of the 22 four causes of action. Plaintiff opposes. 23 // 24 // 25 // 26 // 27 // 28 // 2 13cv1315 1 II. LEGAL STANDARD 2 The court must dismiss a cause of action for failure to state a claim upon which relief can 3 be granted. Fed. R. Civ. P. 12(b)(6). A motion to dismiss under Rule 12(b)(6) tests the legal 4 sufficiency of the complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). The court 5 must accept all allegations of material fact as true and construe them in the light most favorable 6 to the nonmoving party. Cedars-Sanai Med. Ctr. v. Nat’l League of Postmasters of U.S., 497 7 F.3d 972, 975 (9th Cir. 2007). Material allegations, even if doubtful in fact, are assumed to be 8 true. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). However, the court need not 9 “necessarily assume the truth of legal conclusions merely because they are cast in the form of 10 factual allegations.” Warren v. Fox Family Worldwide, Inc., 328 F.3d 1136, 1139 (9th Cir. 11 2003) (internal quotation marks omitted). In fact, the court does not need to accept any legal 12 conclusions as true. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). 13 “While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed 14 factual allegations, a plaintiff’s obligation to provide the ‘grounds’ of his ‘entitlement to relief’ 15 requires more than labels and conclusions, and a formulaic recitation of the elements of a cause 16 of action will not do.” Twombly, 550 U.S. at 555 (internal citations omitted). Instead, the 17 allegations in the complaint “must be enough to raise a right to relief above the speculative 18 level.” Id. Thus, “[t]o survive a motion to dismiss, a complaint must contain sufficient factual 19 matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Iqbal, 556 U.S. 20 at 678 (citing Twombly, 550 U.S. at 570). “A claim has facial plausibility when the plaintiff 21 pleads factual content that allows the court to draw the reasonable inference that the defendant is 22 liable for the misconduct alleged.” Id. “The plausibility standard is not akin to a ‘probability 23 requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully.” 24 Id. A complaint may be dismissed as a matter of law either for lack of a cognizable legal theory 25 or for insufficient facts under a cognizable theory. Robertson v. Dean Witter Reynolds, Inc., 749 26 F.2d 530, 534 (9th Cir. 1984). 27 Generally, courts may not consider material outside the complaint when ruling on a 28 motion to dismiss. Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 1542, 1555 n.19 3 13cv1315 1 (9th Cir. 1990). However, documents specifically identified in the complaint whose authenticity 2 is not questioned by parties may also be considered. Fecht v. Price Co., 70 F.3d 1078, 1080 n.1 3 (9th Cir. 1995) (superceded by statutes on other grounds). Moreover, the court may consider the 4 full text of those documents, even when the complaint quotes only selected portions. Id. It may 5 also consider material properly subject to judicial notice without converting the motion into one 6 for summary judgment. Barron v. Reich, 13 F.3d 1370, 1377 (9th Cir. 1994). 7 8 III. DISCUSSION 9 A. 10 Request for Judicial Notice As a preliminary matter, Defendant requests judicial notice of a number of items, 11 including Plaintiff’s voluntary petition filed in bankruptcy court. (Doc. 8.) Because courts may 12 take judicial notice of “matters of public record,” Lee v. City of Los Angeles, 250 F.2d 668, 689 13 (9th Cir. 2011), the Court GRANTS Defendant’s request as to Exhibit A.1 14 15 B. The Doctrine of Judicial Estoppel Bars Plaintiff’s Complaint 16 “Judicial estoppel is an equitable doctrine that precludes a party from gaining an 17 advantage by asserting one position, and then later seeking an advantage by taking a clearly 18 inconsistent position.” Hamilton v. State Farm Fire & Cas. Co., 270 F.3d 778, 782 (9th Cir. 19 2001) (citing Rissetto v. Plumbers & Steamfitters Local 343, 94 F.3d 597, 600–601 (9th Cir. 20 1996); Russell v. Rolfs, 893 F.2d 1033, 1037 (9th Cir. 1990)). Judicial estoppel is used to bar 21 inconsistent positions in the same litigation, and is also “appropriate to bar litigants from making 22 incompatible statements in two different cases.” Hamilton, 270 F.3d at 783. Courts may 23 consider the following three factors in determining whether to apply the doctrine of judicial 24 estoppel: (a) whether a party is asserting a clearly inconsistent position to that of a prior case, (b) 25 whether accepting such an inconsistent position in the current proceeding would imply that the 26 27 1 Defendant also requests judicial notice of a the docket sheet for bankruptcy petition, the certificate of notice from the bankruptcy court, and a Google map printout. (Doc. 8.) Because the 28 Court resolves the motions without reference to these documents, the Court DENIES AS MOOT these requests for judicial notice. 4 13cv1315 1 earlier court was misled, and (c) whether the party would get an unfair advantage or impose an 2 unfair detriment to the opposing party if not estopped. Id. at 782–783 (citing New Hampshire v. 3 Maine, 532 U.S. 742, 750–751 (2001)). In the bankruptcy context, courts have applied judicial 4 estoppel to prevent debtors who failed to disclose claims in bankruptcy proceedings from later 5 asserting those claims after their bankruptcy case has closed. Hamilton, 270 F.3d at 783 (citing 6 Hay v. First Interstate Bank of Kalispell, N.A., 978 F.2d 555, 557 (9th Cir. 1992)). 7 Defendant argues that Plaintiff’s claims are barred by the doctrine of judicial estoppel 8 because she failed to schedule this action, which arose during the pendency of her prior 9 bankruptcy proceeding, as an asset in that proceeding. (Def.’s Mot. 1:21–24.) In response, 10 Plaintiff argues that her complaint is not barred by judicial estoppel because (1) she had no duty 11 to disclose claims that arose after she filed for bankruptcy and (2) the duty to amend schedules 12 only applies to Chapter 11 bankruptcies, not Chapter 7 bankruptcies. (Pl.’s Opp’n 2: ¶¶ 1-5.) The 13 Court disagrees with both of Plaintiff’s arguments and addresses each one in turn. 14 15 16 17 1. Judicial Estoppel is not Limited to Claims that Arise Before a Petition for Bankruptcy is Filed A debtor’s duty to disclose potential claims as assets continues for the duration of the 18 bankruptcy proceedings. Hamilton, 270 F.3d at 785; United States v. Nunez, 419 F.Supp.2d 19 1258, 1264 (S.D. Cal. 2005). “Judicial estoppel will be imposed when the debtor has knowledge 20 of enough facts to know that a potential cause of action exists during the pendency of the 21 bankruptcy, but fails to amend his schedules or disclosure statements to identify the cause of 22 action as a contingent asset.” Id. at 784 (citing Hay, 978 F.2d at 557 (acknowledging that “all 23 facts were not known to [the debtor] at the time, but enough was known to require notification of 24 the asset to the bankruptcy court”)). 25 Here, Plaintiff concedes that all of her claims arose on December 16, 2011, during the 26 pendency of her bankruptcy proceedings. (Compl. ¶¶ 14, 15.) However, she never alleges that 27 she disclosed these claims to the bankruptcy court. Thus, Plaintiff’s allegations confirm that she 28 had “knowledge of enough facts to know that a potential cause of action exist[ed] during the 5 13cv1315 1 pendency of [her] bankruptcy, but fail[ed] to amend [her] disclosure statements to identify the 2 cause of action as a contingent asset.” Hamilton, 270 F.3d at 784. Therefore, all Plaintiff’s 3 claims are barred by judicial estoppel. Id. at 784–85. 4 Plaintiff attempts to distinguish Hamilton by suggesting that the claims therein accrued 5 before filing for bankruptcy, and her claims accrued after. (Pl.’s Opp’n 2: ¶ 2.) In support of this 6 argument, Plaintiff suggests that 11 U.S.C. § 541(a)(1) relieves Plaintiff from a duty to amend 7 her Chapter 7 bankruptcy schedule when claims arise after the commencement of bankruptcy. 8 (Id. 2:15–19) This argument defies both logic and the law. 9 If this Court were to accept Plaintiff’s position, and allow Plaintiff’s claims to proceed 10 despite the fact that Plaintiff knew about these claims during the pendency of her bankruptcy 11 proceedings, it would undermine “the integrity of the bankruptcy system [which] depends on full 12 and honest disclosure by debtors of all their assets.” Hamilton, 270 F.3d at 785 (citing 13 Rosenshein v. Kleban, 918 F.Supp. 98, 104 (S.D.N.Y. 1996)). As the Ninth Circuit explained: The interests of both the creditors, who plan their actions in the bankruptcy proceeding on the basis of information supplied in the disclosure statements, and the 15 bankruptcy court, which must decide whether to approve the plan of reorganization on the same basis, are impaired when the disclosure provided by the debtor is 16 incomplete. 17 Id. Moreover, Plaintiff cites no authority, and the Court is aware of none, that supports her novel 18 position. Indeed, many courts have applied judicial estoppel to bar claims that arose after the 14 19 debtor filed for bankruptcy. See Hay, 978 F.2d at 556–57; Graham v. U.S. Bank, N.A., No. 1320 cv-01613, 2013 WL 2285184, at *4–5 (N.D. Cal. May 23, 2013); Vertkin v. Wells Fargo Home 21 Mortg., No. C 10-00775, 2010 WL 3619798, at *3 (N.D. Cal. Sept. 9, 2010). 22 23 24 25 2. Debtors Have a Duty to Disclose Potential Causes of Action in Chapter 7 Bankruptcy Cases Plaintiff next attempts to distinguish Hay from the case at bar because it dealt with a 26 Chapter 11 filing rather than a Chapter 7 bankruptcy. (Pl.’s Opp’n 2: ¶¶ 4, 5.) This argument is 27 unpersuasive. 28 In Hamilton, a Chapter 7 bankruptcy case dealing with judicial estoppel, the Ninth Circuit 6 13cv1315 explicitly relied on the analysis in Hay, a Chapter 11 case also dealing with judicial estoppel, 1 without drawing any distinction between Chapter 7 and Chapter 11 bankruptcies. Hamilton, 270 2 F.3d at 783. Contrary to Plaintiff’s assertions, courts routinely apply judicial estoppel in Chapter 3 7 cases. See, e.g, Elston v. Westport Ins. Co., 253 F.App’x. 697, 699 (9th Cir. 2007); Vertkin, 4 2010 WL 3619798, at *1; Key v. Evergreen Prof’l Recoveries, Inc., No. 09-5130RJB, 2009 U.S. 5 Dist. LEXIS 73841, at *1–2, *9 (W.D. Wash. Aug. 19, 2009) (barring debtor’s complaint on 6 judicial estoppel grounds for failing to amend her Chapter 7 bankruptcy schedules to include 7 claims of illegal debt collection practices against a creditor that was listed in her Chapter 7 8 petition); Rose v. Beverly Health and Rehab. Serv., Inc., 356 B.R.18, 22 (E.D. Cal. 2006). 9 Plaintiff cites no authority, and the Court is aware of none, which prevents courts from applying 10 the doctrine of judicial estoppel to Chapter 7 cases. 11 12 IV. CONCLUSION & ORDER 13 In light of the foregoing, the Court finds that Plaintiff’s claims that arose during the 14 pendency of her bankruptcy proceedings are judicially estopped, and GRANTS Defendant’s 15 motion to dismiss WITH LEAVE TO AMEND. Although the parties agree that all of 16 Plaintiff’s claims arose during the pendency of the prior bankruptcy proceedings, the pleadings 17 reveal that Plaintiff may have claims that arose after her bankruptcy discharge which are not 18 subject to judicial estoppel. To wit, it appears that Plaintiff alleges that she received phone calls 19 in violation of numerous laws until December 6, 2012, well after her discharge on February 23, 20 2012. (Compl. ¶ 14.) Therefore, Plaintiff may file an amended complaint articulating any 21 claims which arose after discharge on or before October 18, 2013. 22 IT IS SO ORDERED. 23 DATED: October 3, 2013 24 25 M. James Lorenz United States District Court Judge 26 COPY TO: HON. NITA L. STORMES 27 UNITED STATES MAGISTRATE JUDGE 28 ALL PARTIES/COUNSEL 7 13cv1315
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