IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF CALIFORNIA
June 3, 2010
KIAMARS AZIZKHAN, PLAINTIFF,
FIRST FRANKLIN LOAN SERVICING; FIRST FRANKLIN FINANCIAL CORPORATION; CAL-WESTERN RECONVEYANCE CORPORATION; BANK OF AMERICA, NATIONAL ASSOCIATION AS SUCCESSOR BY MERGER TO LASALLE BANK NATIONAL ASSOCIATION, AS TRUSTEE FOR FIRST FRANKLIN MORTGAGE LOAN TRUST, MORTGAGE LOAN ASSET BACKED CERTIFICATES, SERIES 2007-FF2; MORTGAGE ELECTRONIC REGISTRATION SYSTEM, INC.; ANCHOR FINANCIAL MORTGAGE COMPANY, INC.; RYAN N. SMITH; AND DOES 1-20 INCLUSIVE, DEFENDANTS.
The opinion of the court was delivered by: Garland E. Burrell, Jr. United States District Judge
ORDER DISMISSING PLAINTIFF'S FEDERAL CLAIMS AND DECLINING SUPPLEMENTAL JURISDICTION OVER STATE LAW CLAIMS AND DENYING DEFENDANTS' MOTION FOR RULE 11 SANCTIONS*fn1
Defendants Home Loan Services, Inc d/b/a First Franklin Loan Servicing, First Franklin Financial Corporation, Bank of America, National Association, and Mortgage Electronic Registration Systems, Inc. ("Defendants") move to dismiss Plaintiff's first amended complaint under Federal Rule of Civil Procedure 12(b)(6). (Docket No. 14.) Defendants also filed a motion for sanctions under Federal Rule of Civil Procedure 11(c), seeking an award of $11,405 in attorneys' fees. (Docket No. 16.) Plaintiff opposes Defendants' motion for sanctions and filed a Statement of Non-Opposition to Defendants' dismissal motion. (Docket Nos. 28, 30.)
I. Dismissal of Plaintiff's Federal Claims
Plaintiff's Statement of Non-Opposition states that he "does not oppose" Defendants' dismissal motion "insofar as it relates to [his] Eighth Cause of Action under the Real Estate Settlement Procedures Act, 12 U.S.C. §2605 ("RESPA") and [his] Ninth Cause of Action under the Truth in Lending Act, 15 U.S.C. §1604 ("TILA")...." (Statement of Non-Opposition 2:2-10.) Further, "Plaintiff... requests that all claims against all Defendants... be dismissed, without prejudice, or in the alternative, that Plaintiff be granted leave to amend his First Amended Complaint in this matter so as to remove the Causes of Action under TILA and RESPA which had previously been plead [sic] by the Plaintiff...." (Id. 2:11-14.) Plaintiff also argues that "[w]hen the federal claims that served as the basis for the Court's original jurisdiction are eliminated, either through dismissal... or by [amendment]," the court should "decline to assert supplemental jurisdiction over the remaining state law causes of action, and dismiss them without prejudice...." (Id. 2:24-3:3.)
In accordance with Plaintiff's Statement of Non-Opposition, Plaintiff's TILA and RESPA claims are dismissed.
II. Defendants' Rule 11 Motion
Defendants argue they are entitled to an award of attorneys' fees because Plaintiff's counsel failed to comply with Rule 11(b)'s requirements. Specifically, Defendants contend Plaintiff's first amended complaint was "filed for purposes of delay [and] to avoid the hearing of Defendants' Motion to Dismiss the original complaint." (Mot. for Sanctions 5:8-10.) Defendants further argue that Plaintiff's first amended complaint "does not differ significantly from the original [c]omplaint" and does not "state a claim upon which relief can be granted...." (Id. 5:9-12.) Plaintiff counters that "[w]hile Plaintiff's counsel admits that her pleadings in this matter have been, at times, somewhat 'inartfully' pled, these instances are certainly not tantamount to the bad faith and wilful disobedience to the Court's Orders as contemplated under the subject Rules and applicable authorities, so as to justify the imposition of the most extreme sanction in the form of attorneys fees payable to an opposing party." (Opp'n to Mot. for Sanctions 3:2-7.)
"Rule 11 authorizes a court to impose a sanction on any attorney, law firm, or party that brings a claim for an improper purpose or without support in law or evidence." Sneller v. City of Bainbridge Island, --- F.3d ----, 2010 WL 2076805, at *2 (9th Cir. May 25, 2010). Specifically, Rule 11(b) provides in pertinent part:
By presenting to the court a pleading... ---whether by signing, filing, submitting, or later advocating it---an attorney... certifies that to the best of the person's knowledge, information, and belief, formed after inquiry reasonable under the circumstances:
(1) it is not being presented for any improper purpose, such as to harass, cause unnecessary delay, or needlessly increase the cost of litigation;
(2) the claims... and other legal contentions are warranted by existing law or by non-frivolous argument for extending, modifying, or reversing existing law or for establishing new law;
(3) the factual contentions have evidentiary support or, if specifically so identified, will likely have evidentiary support afer a Fed. R. Civ. P. 11(b). As explained by the Ninth Circuit, under Rule 11:
[a]n attorney has a duty prior to filing a complaint not only to conduct a reasonable factual investigation, but also to perform adequate legal research that confirms whether the theoretical underpinnings of the complaint are warranted by existing law or a good faith argument for an extension, modification or reversal of existing law. One of the fundamental purposes of Rule 11 is to reduce frivolous claims, defenses or motions and to deter costly meritless maneuvers, thereby avoiding delay and unnecessary expense in litigation.
Christian v. Mattel, Inc., 286 F.3d 1118, 1127 (9th Cir. 2002) (quotation and citations omitted).
Defendants argue Plaintiff's first amended complaint violates Rule 11(b) since:
It [was] evident[ly] filed for purposes of delay, to avoid the hearing of Defendants' Motion to Dismiss the original complaint. The First Amended Complaint does not differ significantly from the original [c]omplaint. It also fails to state a claim upon which relief can be granted against Defendants, for reasons set forth below. In general, none of these Defendants made the alleged misrepresentations which are subject of Plaintiff's complaint and each of Plaintiff's claims for relief is insufficient as a matter of law.
(Mot. for Sanctions 5:7-14.) Defendants then address each of Plaintiff's claims and assert, often without explanation or citation to any authority, that they fail to state a claim. (Id. 5-8.)
Defendants unsupported and conclusory arguments, however, are insufficient to demonstrate that Rule 11 sanctions should be awarded. Defendants' motion does not identify the subsection or subsections of Rule 11(b) that Defendants contend Plaintiff's first amended complaint violates; nor have Defendants supported their arguments and explained how the first amended complaint runs afoul of Rule 11(b). See Verigy US, Inc. v. Mayder, No. C-07-04330 RMW, 2008 WL 4820755, at *9 (N.D. Cal. Nov. 4, 2008) (stating that "[i]n assessing whether the filing of a particular paper was frivolous under Rule 11, the court should not consider the ultimate failure on the merits... but rather whether the position was legally unreasonable or without factual foundation") (quotations and citation omitted). Further, Defendants cited no authority in their motion suggesting Rule 11 sanctions are warranted when a complaint merely fails to state a claim. Defendants raise additional arguments in their reply brief in support of their position, but these arguments are disregarded since Defendants have not shown that these new arguments should be considered. See United States v. Romm, 455 F.3d 990, 997 (9th Cir. 2006) (stating that "arguments not raised by a party in its opening brief are deemed waived") (quoting Smith v. March, 194 F.3d 1045, 1052 (9th Cir. 1999); Ass'n of Irritated Residents v. C & R Vanderham Dairy, 435 F. Supp. 2d 1078, 1089 (E.D. Cal. 2006) (stating that "[i]t is inappropriate to consider arguments raised for the first time in a reply brief.") Since Defendants have not demonstrated that Plaintiff's first amended complaint violates Rule 11(b), their motion is denied.
III. 28 U.S.C.§ 1367(c)(3) Dismissal of Plaintiff's State Law Claims
Further, since no federal claims remain, the court may decide whether to continue exercising supplemental jurisdiction over Plaintiff's state law claims. See Acri v. Varian Assocs., Inc., 114 F.3d 999, 1001 n.3 (9th Cir. 1997) (en banc). Under 28 U.S.C. § 1367(c)(3), a district court "may decline to exercise supplemental jurisdiction over a [state law] claim" when "all claims over which it has original jurisdiction" have been dismissed. This decision should be informed by the values of economy, convenience, fairness and comity as delineated by the Supreme Court in United Mine Workers of Am. v. Gibbs, 383 U.S. 715, 726 (1996). Acri v. Varian Associates, Inc., 114 F.3d 999, 1001 (9th Cir. 1997) (en banc).
Comity weighs in favor of declining supplemental jurisdiction since state courts have the primary responsibility for developing and applying state law. See Acri, 114 F.3d at 1001 (stating that "in the usual case in which all federal-law claims are eliminated before trial, the balance of factors will point towards declining to exercise jurisdiction over the remaining state-law claims") (quotations and citation omitted); Gini v. Las Vegas Metro. Police Dep't, 40 F.3d 1041, 1046 (9th Cir. 1994) (stating that "[i]n the usual case in which federal-law claims are eliminated before trial, the balance of factors will point toward declining to exercise jurisdiction over the remaining state law claims") (quoting Schneider v. TRW, Inc., 938 F.2d 986, 993 (9th Cir. 1991)). Further, none of the other Gibbs factors favor retaining supplemental jurisdiction over Plaintiff's state law claims. Therefore, the court declines to exercise supplemental jurisdiction over Plaintiff's state law claims and those claims are dismissed without prejudice under 28 U.S.C. § 1367(c)(3). This action shall be closed.