United States District Court, N.D. California
MORRIS S. MAXWELL, et al., Plaintiffs,
MOAB INVESTMENT GROUP, LLC, et al., Defendants.
ORDER DECLARING PLAINTIFFS VEXATIOUS LITIGANTS Re: Dkt. No. 15
WILLIAM H. ORRICK, District Judge.
This case presents the question of when to declare a litigant "vexatious." It is the most recent in a long line of actions brought by Morris S. Maxwell and Shawn R. Maxwell ("the Maxwells") in an effort to prevent foreclosure on, and their eviction from, a residential property they owned in San Mateo, California (the "property"). Over the course of five years of near-continuous litigation, the Maxwells have brought four lawsuits in state court, two in federal district court, and one adversary proceeding in federal bankruptcy court, all aimed at maintaining possession of the property. Since the Maxwells' first state court action, the vast majority of their claims have been barred by res judicata. In a prior action in this Court, I warned the Maxwells about continuing to bring frivolous litigation. Undeterred, the Maxwells have persisted in filing iterations of the same complaint.
Defendant MOAB Investment Group, LLC ("MOAB") has moved to declare the Maxwells vexatious litigants and to impose upon them a pre-filing review order. The record in this case reveals a pattern of incessant, frivolous, and harassing litigation that is unlikely to be effectively addressed by sanctions other than a pre-filing review order. The time has come to check the Maxwells' repeated attempts to relitigate the same allegations and issues despite multiple orders from state and federal courts finding the Maxwells' claims are precluded. MOAB's motion is GRANTED.
In January 2007, the Maxwells borrowed $830, 000 from IndyMac Bank, F.S.B. and secured the loan with a deed of trust to the property. RJN Ex. 2 at 3-4. The deed of trust designated IndyMac Bank, F.S.B. as the lender, Mortgage Electronic Registration Systems, Inc. ("MERS") as the beneficiary, and First American Title Insurance Co. as the trustee. RJN Ex. 9 at 2. Between 2007 and 2010, the beneficiary changed from MERS to IndyMac Federal Bank, and then from IndyMac Federal Bank to Deutsche Bank National Trust Company, N.A. ("Deutsche"). RJN Ex. 2 at 3-4. In 2008, Quality Loan Services Corp. ("Quality Loan") replaced First American Title Insurance Co. as the trustee. RJN Ex. 2 at 3-4. Quality Loan filed a notice of default in December 2008 and a notice of trustee's sale in March 2009. RJN Ex. 2 at 3-4. As a result of the numerous actions filed by the Maxwells, discussed in more detail below, the trustee's sale did not occur until August 2013, at which point MOAB purchased the property at a public foreclosure auction. RJN 13 at 1-2. When the Maxwells refused to surrender possession, MOAB filed an unlawful detainer action in the Superior Court of California, San Mateo County. Dkt. No. 12 Ex. 2. The court granted summary judgment for MOAB on February 26, 2014. Dkt. No. 12 Ex. 3.
Between April 2009 and July 2014, the Maxwells brought four lawsuits in state court, two in federal district court, and one adversary proceeding in federal bankruptcy court, all aimed at maintaining possession of the property. The following is a summary of those actions:
Maxwell v. Quality Loan Serv., Inc.
Case No. CIV482969 (Cal. Super. Ct. Apr. 9, 2009)
The Maxwells filed their first state court case on April 9, 2009 in San Mateo County Superior Court. RJN Ex. 1. They amended their complaint three times, naming different defendants and alleging different causes of action each time. RJN Ex. 9 at 3-6. Named defendants included Quality Loan, MERS, Duetsche, the Federal Deposit Insurance Corporation, and One West Bank, F.S.B. ("One West"). RJN Ex. 9 at 3-6. Alleged causes of action included negligent misrepresentation of fact, intentional misrepresentation of fact, breach of fiduciary duty, violations of California's Unfair Competition Law, fraud, wrongful foreclosure, breach of contract, violations of California's Rosenthal Act, quiet title, and negligent interference with prospective economic relations. RJN Ex. 9 at 3-6. The Maxwells' primary contention in the case, as it was in all but one of the six cases to follow, was that the assignments between beneficiaries to the deed of trust were ineffective and/or fraudulent. Although the Superior Court denied the Maxwells' first request for a preliminary injunction in June 2010, the Maxwells filed three additional preliminary injunction requests, all of which were either denied by the court or voluntarily withdrawn by the Maxwells. RJN Ex. 9 at 3-6. On December 10, 2011, the court sustained without leave to amend Deutsche and One West's demurrers as to all but one of the causes of action in the Maxwells' third amended complaint. RJN Ex. 9 at 5. On August 24, 2012, the Maxwells voluntarily dismissed the action. RJN Ex. 2 at 7.
Maxwell v. One West Bank, F.S.B.
Bankr. Adv. Case No. 12-03127 (Bankr. N.D. Cal. Aug. 27, 2012)
The Maxwells filed for Chapter 13 bankruptcy on June 28, 2012. Maxwell v. Deutsche Bank Nat'l Trust Co., No. 13-cv-03957-WHO (N.D. Cal. Aug. 26, 2013) (" Maxwell I "), Dkt. No. 15, Ex. 22. On August 27, 2012, three days after voluntarily dismissing their initial state court action, the Maxwells filed an adversary proceeding against Quality Loan, One West, and Deutsche. Maxwell I, Dkt. No. 15, Ex. 23. In the words of the Bankruptcy Judge, the adversary proceeding alleged "largely the same facts and claims for relief as those... asserted in the state court action." RJN Ex. 2 at 7. The Bankruptcy Judge held that all but one of the Maxwells' causes of action was precluded under res judicata. RJN Ex. 2 at 7-13. The remaining cause of action, brought under the Truth in Lending Act, was dismissed because the statute of limitations had expired. RJN Ex. 2 at 7. The Ninth Circuit Bankruptcy Appellate Panel dismissed the Maxwells' appeal of the Bankruptcy Judge's order for mootness and lack of prosecution. RJN Ex. 5 at 2.
Maxwell v. Deutsche Bank Nat'l Trust Co.
Case No. CIV 521169 (Cal. Super. Ct. Apr. 16, 2013)
On April 16, 2013, the Maxwells filed a second action in San Mateo County Superior Court, naming Deutsche and One West as defendants and alleging causes of action for (1) violation of California Civil Code section 2923.5, (2) violation of California Civil Code section 2923.55, (3) injunctive relief under California Civil Code section 2924.12, and (4) fraudulent execution of trust deed. RJN Ex. 8. The Maxwells' requests for a temporary restraining order ("TRO") and a preliminary injunction were both denied for failure to show a likelihood of success on the merits. RJN Exs. 6-7. On August 5, 2013, the court sustained without leave to amend Deutsche and One West's demurrer against all four causes of action. RJN Ex. 8. The court dismissed the fourth cause of action under res judicata, reasoning that "while different facts are alleged here, the gravamen of the claim is the same: that there is something allegedly deficient about the assignment, which affects the chain of title, thereby depriving Deutsche Bank its beneficial interest in the property." RJN Ex. 8.
Maxwell v. Deutsche Bank Nat'l Trust Co.
Case No. 13-cv-03957-WHO (N.D. Cal. Aug. 26, 2013) ...