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Ash v. Onewest Bank

June 2, 2010

ROBERT ASH AND KATHLEEN ASH, PLAINTIFFS,
v.
ONEWEST BANK, FSB AS SUCCESSOR BY ACQUISITION OF INDYMAC FEDERAL BANK AND LENDER DOE, WELLS FARGO BANK, N.A. AS TRUSTEE/MASTER SERVICER OF THE SECURITIZATION TRUST, MARM 2007-3, DEFENDANTS.



The opinion of the court was delivered by: Frank C. Damrell, Jr. United States District Judge

MEMORANDUM AND ORDER

This matter is before the court on (1) the motions of defendant Wells Fargo Bank, N.A. ("Wells Fargo") to dismiss plaintiffs Robert and Kathleen Ash's ("plaintiffs") Second Amended Complaint ("SAC") pursuant to Federal Rule of Civil Procedure ("FRCP") 12(b)(6) and to strike the addition of Wells Fargo as a named defendant in plaintiffs' SAC, and (2) the motion of defendant OneWest Bank, FSB ("OneWest") to dismiss the SAC pursuant to FRCP 12(b)(6). Plaintiffs oppose the motions.

On February 10, 2010, plaintiffs filed a SAC that adds Wells Fargo as a defendant along with the originally named defendant OneWest. Plaintiffs raise both federal and state claims against Wells Fargo, including an alleged violation of the federal Truth in Lending Act ("TILA"), 15 U.S.C. § 1601 et seq. (Pl.'s SAC ¶ 2).

In its motion to strike, Wells Fargo asserts plaintiffs improperly added it as a defendant in violation of FRCP 15(a)(1). Specifically, Wells Fargo contends that at the time plaintiffs filed the SAC, they were no longer permitted to amend as a matter of right and failed to obtain leave of the court or consent from OneWest to add a new defendant, and thus, it should be dismissed as a defendant. Alternatively, Wells Fargo filed a motion to dismiss the SAC, arguing, among other things, that plaintiffs' TILA claim (Count One of the SAC) should be dismissed under the doctrine of judicial estoppel.

For the reasons set forth below,*fn1 the court finds that Wells Fargo was properly named as a defendant. However, the court finds that plaintiffs' TILA claim against Wells Fargo is property of plaintiffs' bankruptcy estate, and plaintiffs are estopped from bringing the claim herein because they failed to list it as an asset in their bankruptcy proceedings.

Dismissal of the TILA claim leaves plaintiffs' SAC devoid of any federal claims. The remaining claims rest on California state law. In accordance with 28 U.S.C. § 1367(c), the court declines to exercise supplemental jurisdiction over plaintiffs' remaining state law claims, and plaintiffs' complaint is DISMISSED. OneWest's motion to dismiss plaintiffs' SAC is DENIED as MOOT, as plaintiffs allege only state law claims against OneWest.

BACKGROUND

The court adopts the factual and procedural background set forth in the Memorandum and Order addressing plaintiffs' first amended complaint ("FAC"), filed January 26, 2009. (Docket #17.) Additional relevant facts are discussed below:

Plaintiffs brought this action against OneWest, a successor in interest to IndyMac Federal Bank, FSB, for conduct arising out of a loan and subsequent foreclosure activity. Plaintiffs' original complaint, filed on April 9, 2009, asserted a claim for a violation of TILA, among other claims. OneWest's motion to dismiss was granted by this court with leave to amend, and plaintiffs filed the FAC on September 11, 2009. (Docket #10.) OneWest moved to dismiss plaintiffs' FAC, and the court granted the motion, again permitting plaintiffs leave to amend. (Docket # 17.) Plaintiffs filed the SAC on February 10, 2010. Plaintiffs' SAC also names Wells Fargo as a defendant, and asserts a TILA claim against Wells Fargo, rather than OneWest. (Pl.'s SAC ¶ 2.); (Docket #18 [finding plaintiffs could not assert a TILA claim against OneWest because OneWest is a loan servicer, and not a creditor].)

Additionally, plaintiffs' SAC asserts claims for: (1) Fair Debt Collection Practices Act violations, California Civil Code § 1788 - 1788.32 (Id. ¶¶ 5, 113-114); (2) negligence, California Civil Code § 1714(a) (Id. ¶ 116); (3) civil conspiracy, California Civil Code § 1714(a) (Id. ¶¶ 128, 131); (4) constructive fraud, California Civil Code § 1573 (Id. ¶¶ 6, 144-146); and (5) deceit, California Civil Code § 1709 (Id. ¶¶ 135-136).

Plaintiffs filed a petition for Chapter 13 bankruptcy on June 12, 2009. Plaintiffs did not describe their TILA claim against either Wells Fargo or OneWest when filing the requisite schedules for their bankruptcy action, despite the fact that "Item 21" of Schedule B specifically calls for the petitioner to list "other contingent and unliquidated claims of every nature." (Wells Fargo's Mot. Dismiss., filed June 4, 2010, Ex. 1, at 7.).

ANALYSIS

A. Motion to Strike

Wells Fargo moves to strike plaintiffs' SAC, asserting it was improperly named as a defendant in plaintiffs' SAC. Plaintiffs claim that Wells Fargo, as Trustee/Master Servicer of the Securitization Trust ...


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