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JEMBER v. DOWNEY SAVINGS AND LOAN ASSOCIATION F.A.

United States District Court, N.D. California


November 10, 2005.

ASCHILEW JEMBER, FEREDE NEGASH, LEILTI MESFIN, AND LUNCH BOX RESTAURANT Plaintiffs,
v.
DOWNEY SAVINGS AND LOAN ASSOCIATION F.A., WORLD LENDING GROUP, BANK OF THE WEST, SHUMEY MAMO, HAYWARD R. COOK, JR., JENNIFER LARGET, MIGUEL MONERO, EDWARD GUNTHER, AND BARBARA BRANN, Defendants.

The opinion of the court was delivered by: WILLIAM ALSUP, District Judge

ORDER (1) GRANTING JUDGMENT ON PLEADINGS AS TO FEDERAL CLAIMS; (2) DISMISSING ALL CLAIMS AGAINST UNSERVED DEFENDANTS; AND (3) REMANDING STATE CLAIMS
INTRODUCTION
In this civil-rights action, defendants have filed three separate motions to dismiss the complaint pursuant to FRCP 12(b)(6). Because answers have already been filed, this order shall treat these as motions for judgment on the pleadings pursuant to FRCP 12(c). Judgment for defendants is GRANTED as to plaintiffs' federal claims. As the Court declines to exercise supplemental jurisdiction over the remaining claims under state law, these are REMANDED.

STATEMENT

  Plaintiffs, acting pro se, filed their complaint in Alameda County Superior Court on January 25, 2005. The complaint alleged: (1) deprivation of equal rights in violation of 42 U.S.C. 1981; (2) retaliation; (3) criminal conspiracy; (4) deprivation of civil rights in violation of California Civil Code § 51; (5) defamation; (6) invasion of privacy; (7) punitive damages; (8) breach of contract; and (9) request for temporary restraining order and permanent injunction. Defendants removed the action on February 25, 2005.

  This lawsuit appears to concern the refinancing of a loan to one or more plaintiffs. Defendant Downey Savings and Loan was the lender. Defendant World Lending Group was the loan broker. (Defendants argue that plaintiff Aschilew Jember does not have standing because the only two signatories to this loan were Ferede Negash and his wife Leilti Mesfin.) Plaintiffs Ferede Negash and Leilti Mesfin, doing business as the Lunch Box Restaurant, also had an unrelated bank account with defendant Bank of the West. Their dispute with Bank of the West appears to be completely separate from the refinancing transaction. Each of these defendants, on behalf of themselves and their employees also individually named as defendants, now separately move to dismiss the complaint.

  It is difficult to discern exactly what the factual allegations are. Around February 2004, plaintiffs made arrangements with employees of World Lending Group to refinance a property at 460 Leigh Avenue in San Jose, California (Compl. ¶ 7). Around April 26, 2004, plaintiffs entered into a contract with Downey Savings and Loan for a principal loan in the amount of $390,000 (id. ¶¶ 8-9). This agreement included a "right to cancel" the loan on or about April 30, 2004, which was exercised by Downey Savings and Loan and World Lending Group on May 11, 2004 (id. ¶¶ 11-12). The parties entered into a second loan agreement for the amount of $401,760 "with consent," after which plaintiffs demanded immediate cancellation; defendants refused and continued "to manipulate the loan in violation of plaintiffs' rights and in breach of the contract" (id. ¶¶ 13-14). The loan documents were not appended as exhibits to the complaint. In an apparently separate dispute that seems to raise no federal question, defendant Bank of the West is accused of taking money "from the Lunch Box Restaurant account which [total] over $10,1000.00 [sic] from September 2004 to the present."

  Defendants are collectively alleged to have "breached contractual agreements" and violated plaintiffs' constitutional rights "by their discriminatory policies and based on discriminatory practices" (id. ¶ 20). Plaintiffs further accuse defendants of having "an established policy and bank practices to [sic] designed to discriminate [against] minority people" (id. ¶ 21).

  ANALYSIS

  "After the pleadings are closed but within such time as not to delay the trial, any party may move for judgment on the pleadings." FRCP 12(c). A motion for judgment on the pleadings is evaluated according to virtually the same legal standard as a motion to dismiss pursuant to FRCP 12(b)(6), in that the pleadings are construed in the light most favorable to the non-moving party. Brennan v. Concord EFS, Inc., 369 F. Supp.2d 1127, 1130-31 (N.D. Cal. 2005). "Conclusory allegations of law and unwarranted inferences" are insufficient to defeat a Rule 12 motion. Epstein v. Washington Energy Co., 83 F.3d 1136, 1140 (9th Cir. 1996). As to factual allegations, those of the non-moving party are accepted as true, while the allegations of the moving party are assumed to be false. Hal Roach Studios, Inc. v. Richard Feiner and Co., 896 F.2d 1542, 1550 (9th Cir. 1990). Judgment on the pleadings is proper when the moving party clearly establishes on the face of the pleadings that no material issue of fact remains to be resolved and that it is entitled to judgment as a matter of law." Ibid. Matters outside the pleadings should not be considered; otherwise, the motion must be treated as a summary judgment motion. FRCP 12(c). No matters outside the pleadings were considered here.

  This order will focus on plaintiffs' claims under federal law. Plaintiffs' first claim alleges a civil-rights violation under 42 U.S.C. 1981. This section provides in relevant part:

"All persons within the jurisdiction of the United States shall have the same right in every State and Territory to make and enforce contracts . . . as is enjoyed by white citizens, and shall be subject to like punishment, pains, penalties, taxes, licenses, and exactions of every kind, and to no other. . . . The rights protected by this section are protected against impairment by nongovernmental discrimination and impairment under color of State law."
Although § 1981 encompasses private as well as governmental action, it still requires proof of intentional racial discrimination. Gen. Bldg. Contractors Ass'n v. Pennsylvania, 458 U.S. 375, 387-88 (1982). Here, the factual allegations concerning defendants' policies of racial discrimination are sparse. Aside from conclusory allegations that one or more defendants had policies "designed to discriminate [against] minority people," the complaint contains no further information as to which defendant(s) had discriminatory policies or what those policies were (Compl. ¶ 21). This is insufficient to defeat a Rule 12 motion.

  Plaintiffs' third claim alleges criminal conspiracy in violation of 42 U.S.C. §§ 1981, 1983 and 1985. Section 1983 provides that:

"Every person who, under color of any statute, ordinance, regulation, custom, or usage, of any State or Territory or the District of Columbia, subjects, or causes to be subjected, any citizen of the United States or other person within the jurisdiction thereof to the deprivation of any rights, privileges, or immunities secured by the Constitution and laws, shall be liable to the party injured."
Section 1985(3) prohibits conspiring for the purpose of depriving a person or class of persons of the rights and privileges belonging to a citizen of the United States. Putting aside the problem that there is no alleged act "under color of state law," the complaint failed to allege sufficient facts to state a claim under either section. See Sykes v. State of Calif. (Dep't of Motor Vehicles), 497 F.2d 197, 200 (9th Cir. 1974) (enumerating the factors which must be alleged under both § 1983 and § 1985).

  In any event, plaintiffs own allegations suggest that the "right to cancel" provision applied to the first agreement for $390,000, not the second agreement for $401,760 (id. ¶ 11). Furthermore, the complaint alleges that the second loan agreement was executed "with consent" (id. ¶ 13). Nowhere is it alleged that plaintiffs were denied their alleged "right to cancel" the agreement they voluntarily entered or otherwise treated differently on the basis of race.

  CONCLUSION

  For the foregoing reasons, judgment for defendants is GRANTED as to plaintiffs' claims under federal law. Pursuant to 28 U.S.C. 1367(c)(3), the Court declines to exercise supplemental jurisdiction over plaintiffs' remaining claims arising under state law. These claims are immediately REMANDED to the Superior Court for Alameda County. As to defendants Shumey Mamo, Hayward R. Cook, Jr., Jennifer Larget and Edward Gunther, for whom there is no valid proof of service on file, the complaint is DISMISSED in its entirety.

  IT IS SO ORDERED.

20051110

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