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In re Cobb

November 23, 2010

IN RE: CAROL CHRISTI COBB, DEBTOR,
HANK M. SPACONE, APPELLANT,
v.
DEUTSCHE BANK TRUST COMPANY, APPELLEE.



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 appellant Hank M. Spacone's ("Spacone" or "appellant"), acting in his capacity as trustee for the Estate of Cobb, appeal of the bankruptcy court's dismissal of his original adversary complaint and his first amended adversary complaint on December 29, 2009 and March 1, 2010 respectively.*fn1 Appellant names Deutsche Bank Trust Company Americas ("Deutsche Bank") and Aurora Loan Services LLC ("Aurora") as appellees in his opening brief to this court.*fn2 The court has reviewed the parties' briefs and underlying record and by this order, issues its decision AFFIRMING the bankruptcy court's dismissal of the First Amended Adversary Complaint ("FAAC").

BACKGROUND

On or about January 7, 2007 Carol Christi Cobb ("Cobb") executed loan documents with BrooksAmericia Mortgage Corporation for a deed of trust on property at 6405 Kenneth Avenue in Orangevale, California. (Appellant's Opening Br. ["Opening Br."], filed July 18, 2010, at 4). The loan was a refinance transaction in the amount of $1,100,000.00, and was subsequently sold into a loan pool. (Id.; Appellees' Answering Br. ["Appellees' Br."], filed Aug. 2, 2010, at 5).*fn3 Deutsche Bank served as trustee for the securitization of the loan, and Aurora serviced the loan. (ER at 275, 295).

On December 16, 2008, Cobb sent a letter to Aurora, which she asserts was a notice of rescission of the loan transaction. (Opening Br. at 4). On March 24, 2009 Deutsche Bank rejected Cobb's rescission request. (ER at 302). On March 29, 2009, Cobb filed a lawsuit in the Eastern District of California against Deutsche Bank and Aurora seeking rescission and damages. (ER at 2). On March 30, 2009, Cobb filed for Chapter 7 Bankruptcy. (Id.). The Honorable William B. Shubb granted appellees' motion to dismiss the lawsuit on June 25, 2009, concluding that Cobb no longer had legal standing to pursue a case in Federal District Court as a debtor in a Chapter 7 Bankruptcy. (Id. at 2, 61-66).

Spacone, in his capacity as Trustee for the Estate of Cobb, initiated an adversary proceeding against appellees on July 21, 2009 alleging violations of the: (1) Truth in Lending Act ("TILA"), 15 U.S.C. § 1635; (2) Rosenthal Fair Debt Collection Practices Act {"RFDCPA"), Cal. Civ. Code § 1788, et. seq.; and (3) California Business & Professions Code § 17200 for unfair competition ("Unfair Competition Law" or "UCL"). On December 29, 2009 the bankruptcy court granted appellees' motion to dismiss with leave to amend. (ER at 287).

The FAAC was filed on January 7, 2010 against appellee Deutsche Bank*fn4 alleging the same three violations contained in the original adversary complaint as well as three additional causes of action for: (1) negligence; (2) civil conspiracy; and (3) breach of the covenant of good faith and fair dealing. (ER at 289). Deutsche Bank moved to dismiss all six causes of action, (ER at 362-92), and the bankruptcy court granted the motion without leave to amend in a minute order dated March 1, 2010. (ER 425-28).

On March 10, 2010, Spacone filed a notice of appeal specifically noting the March 1, 2010 dismissal of the FAAC. (ER at 429). Appellant filed the opening brief in the instant action on July 18, 2010.

STANDARD

A district court's standard of review over a bankruptcy court's decision is identical to the standard used by circuit courts reviewing district court decisions. See In re Baroff, 105 F.3d 439, 441 (9th Cir. 1997). Thus, the bankruptcy court's factual findings are reviewed for clear error, and its conclusions of law are reviewed de novo. See Fed. R. Bankr. P. 8013; In re Southern Cal. Plastics, Inc., 165 F.3d 1243, 1245 (9th Cir. 1999).

ANALYSIS*fn5

A. Claims and Parties at Issue on Appeal

Appellees assert that the claims resolved in the December 29, 2009 bankruptcy court order and all claims against defendant Aurora have been released by appellant's failure to file timely appeal of that order and by appellant's failure to reallege such claims in the amended adversary complaint. Appellant argues that he is entitled to appeal the December 29th order because it was not a final judgment. (Appellant's Reply Br. ["Reply Br."], filed Sep. 28, 2010, at 1-3).

It is a well established rule in the Ninth Circuit that a plaintiff waives all causes of action alleged in the original complaint which are not alleged in the amended complaint. London v. Coopers & Lybrand, 644 F.2d 811, 814 (9th Cir. 1981). Claims against a defendant included in the original complaint can also be waived when the plaintiff fails to state claims against the defendant in the amended complaint. See Teal v. Vargo, 9 Fed. Appx. 718, 719 (9th Cir. 2001)(holding that the plaintiff waived his claims against various defendants who were included in the original and first amended complaints by failing to state claims against them in his second amended complaint); Hal Roach Studios, Inc. v. Richard ...


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