United States District Court, N.D. California, San Jose Division
ORDER GRANTING DEFENDANTS' MOTIONS TO DISMISS, DENYING PLAINTIFF'S MOTION TO RECUSE, AND DECLARING PLAINTIFF A VEXATIOUS LITIGANT
LUCY H. KOH, District Judge.
Before the Court are: (1) motions to dismiss filed by defendants Countrywide Home Loans, Inc. ("Countrywide"), ReconTrust Company, N.A. ("ReconTrust"), Select Portfolio Servicing, Inc. ("SPS"), The Bank of New York Mellon fka The Bank of New York, as Trustee for the Certificateholders CWALT, Inc. Alternative Loan Trust 2005-62 Mortgage Pass-Through Certificates, Series 2005-62 ("BONY"), and Mortgage Electronic Registration Systems, Inc. ("MERS") (collectively, "Defendants"), ECF Nos. 20, 23; (2) a motion to recuse filed by pro se plaintiff Fareed Sepehry-Fard ("Plaintiff"), ECF Nos. 32, 37; (3) various other motions filed by Plaintiff, ECF Nos. 19, 33, 44, 51; and (4) the Court's order to show cause why Plaintiff should not be declared a vexatious litigant, ECF No. 28.
The Court finds these matters suitable for decision without oral argument under Civil Local Rule 7-1(b) and hereby VACATES the hearing on the order to show cause set for March 12, 2015, and the hearing on the motions to dismiss set for May 28, 2015. Having considered the submissions of the parties, the relevant law, and the record in this case, the Court hereby GRANTS Defendants' motions to dismiss, DENIES Plaintiff's motion to recuse, DENIES as moot Plaintiff's other motions, and DECLARES Plaintiff a vexatious litigant.
A. Factual Background
Although Plaintiff's complaint alleges few cognizable facts, the following can be gleaned from the judicially noticeable record:
Plaintiff acquired sole title to the real property at 18314 Baylor Avenue, Saratoga, California 95070 (the "Property") in May 2004. In September 2005, Plaintiff refinanced the Property with two mortgage loans. ECF Nos. 24-1, 24-2. As evidenced by the deeds of trusts recorded on September 26, 2005, the first loan from Countrywide was for $808, 800.00. ECF No. 24-1 at 2, 4. The second loan was from Countrywide Bank in the amount of $167, 000.00 (collectively, with the first loan, the "Notes"). ECF No. 24-2 at 2-4. MERS was the "beneficiary" of the Notes. ECF No. 24-1 at 4; ECF No. 24-2 at 3.
On March 11, 2010, MERS recorded an assignment of the first deed of trust whereby BONY became the beneficiary. ECF No. 24-3. On July 16, 2012, MERS recorded an assignment of the second deed of trust whereby BONY once again became the beneficiary. ECF No. 24-4. Eventually, Plaintiff paid off the second loan, and a full reconveyance was recorded on September 25, 2012. ECF No. 24-5.
Plaintiff, however, fell behind on repaying the first loan. See ECF No. 1-1 ("Compl.") ¶ 196 (admitting that "payments were not made by Plaintiff"). As a result, a notice of default was recorded on February 18, 2010. ECF No. 24-6. That notice was rescinded on July 22, 2010. ECF No. 24-7. Defendants represent that, at the present time, there are no foreclosure proceedings pending against the Property. ECF No. 23 at 2.
B. Procedural History
This is the eighth foreclosure-related lawsuit Plaintiff has filed, and the fourth relating to the Property. Plaintiff's four other foreclosure-related lawsuits involve another property located at 12309 Saratoga Creek Drive, Saratoga, California 95070. Although this second property is not the subject of this order, the Court notes that Plaintiff's lawsuits surrounding that property raise claims and theories of liability virtually identical to those he has raised with respect to the Property.
On September 28, 2011, Plaintiff filed his first action concerning the Property in Santa Clara County Superior Court. See Sepehry-Fard v. Bank of N.Y. Mellon et al., No. 1-11-CV-210028 (Cal. Super. Ct.). The action was brought against BONY, Plaintiff's then and current lender, and Bank of America, Plaintiff's then-servicer, among others. ECF No. 24-8. After granting Plaintiff leave to amend, the state trial court sustained the defendants' demurrer to Plaintiff's first amended complaint in an order filed on January 4, 2013. ECF No. 24-9. The court reviewed and rejected Plaintiff's two theories of liability-that securitization of a mortgage renders the loan unenforceable and that a borrower may challenge a foreclosing party's standing to foreclose. Id. at 2. In so ruling, the trial court dismissed Plaintiff's causes of action for declaratory relief, negligence, quasi-contract, and accounting, as well as his causes of action under the federal Real Estate Settlement Procedures Act ("RESPA"), the federal Fair Debt Collection Practices Act ("FDCPA"), and California's Unfair Competition Law ("UCL"). Id. at 3-5. Plaintiff's appeal of that order-case number H039493-remains pending in California's Sixth District Court of Appeal.
Plaintiff filed his second foreclosure-related action concerning the Property on March 14, 2012, this time in federal court. See Sepehry-Fard v. Bank of N.Y. Mellon, N.A. (" Sepehry-Fard I "), No. 5:12-CV-1260 LHK, 2013 WL 4030837, at *2 (N.D. Cal. Aug. 5, 2013). In that action, presided over by the undersigned, Plaintiff once again sued BONY and Bank of America, among others. Id. at *1. Although styled as a civil rights lawsuit brought under 42 U.S.C. §§ 1983, 1985, ECF No. 24-10, "[t]he gravamen of [Plaintiff's] Complaint was that Defendants were attempting to illegally foreclose on the Property, " Sepehry-Fard I, 2013 WL 4030837, at *2. Liberally construing Plaintiff's complaint, this Court "surmise[d] that [Plaintiff] is attempting to allege that Defendants lacked the authority to foreclose on the Property because certain signatures on the documents assigning the First Deed of Trust to Defendant Bank of New York were forged or otherwise fraudulent." Id. at *8. Ultimately, this Court granted two motions to dismiss for failure to state a claim and entered an order of dismissal on August 5, 2013. Id. at *9; see also Sepehry-Fard I, 2012 WL 4717870, at *3-4 (N.D. Cal. Oct. 2, 2012) (granting the first motion to dismiss). Plaintiff then filed a motion to alter or amend the judgment, which this Court denied on February 3, 2014. See Sepehry-Fard I, 2014 WL 460895 (N.D. Cal. Feb. 3, 2014). Plaintiff appealed, and the Ninth Circuit unanimously affirmed this Court's ruling in a summary disposition. See Sepehry-Fard I, 588 F.Appx. 685, 686 (9th Cir. 2014).
Plaintiff filed his third lawsuit concerning the Property on December 12, 2013. In that action, Plaintiff sued all Defendants here except for SPS. Sepehry-Fard v. Countrywide Home Loans. Inc. (" Sepehry-Fard II "), No. 13-CV-05769-BLF, 2014 WL 2707738, at *1 (N.D. Cal. June 13, 2014). On June 13, 2014, Judge Freeman dismissed Plaintiff's lawsuit, which advanced a single state law quiet title claim, for want of subject matter jurisdiction. Id. at *3-6. In so doing, Judge Freeman noted that "after the briefing on Defendants' motions to dismiss had concluded, " Plaintiff filed a motion for leave to amend seeking "to add thirteen additional claims against all Defendants, " including claims under the federal Telephone Consumer Protection Act of 1991 ("TCPA"), the federal Racketeer Influenced and Corrupt Organizations Act ("RICO"), the federal Truth in Lending Act ("TILA"), FDCPA, RESPA, and 42 U.S.C. §§ 1981-1982. Id. at *2. Declining to consider Plaintiff's untimely federal claims, Judge Freeman explained that "Plaintiff's invocation of a myriad of federal statutes in the proposed FAC in an apparent attempt to recharacterize the primary issue and convince the Court to retain jurisdiction does not suffice to confer jurisdiction where there was none." Id. at *5. On August 4, 2014, Judge Freeman denied reconsideration. See Sepehry-Fard II, 2014 WL 3821544 (N.D. Cal. Aug. 4, 2014).
Undeterred, Plaintiff filed the instant lawsuit on November 20, 2014-his fourth relating to the Property. ECF Nos. 1, 4. As with Plaintiff's previous suits, it is difficult to discern precisely what Plaintiff is alleging in his 122-page complaint (over 600 pages including exhibits). In fact, at one point Plaintiff goes so far as to accuse Defendants of murder. Compl. ¶ 18. Nevertheless, the gravamen of Plaintiff's complaint, liberally construed, appears once more to be that Defendants have threatened to foreclose on the Property illegally. See id. ¶ 2 ("This is a civil action for Quite [sic] Title, immediate injunction relief, declaratory relief and award of Plaintiff's actual and punitive damages for Defendants' unlawfully clouding the title to Plaintiff's real property...."); id. (alleging violations of federal and state law based on the "threat of foreclosure when no money is due to any of the Defendants"). In addition, Plaintiff formally asserts 32 causes of action against Defendants, including various tort claims and alleged violations of RICO, TILA, FDCPA, RESPA, and California's UCL. Id. ¶ 11.
On January 29, 2015, Defendants filed their motions to dismiss. ECF No. 20 (motion brought by SPS, BONY, and MERS); ECF No. 23 (motion brought by Countrywide and ReconTrust). Plaintiff's "Consolidated Response, " filed on February 12, 2015, did not address any of the arguments raised in Defendants' motions. ECF No. 40. Defendants replied on February 18, 2015, ECF No. 49 (reply of SPS, BONY, and MERS), and February 19, 2015, ECF No. 50 (reply of Countrywide and ReconTrust).
On January 30, 2015, the Court issued an order to show cause why Plaintiff should not be declared a vexatious litigant. ECF No. 28. The order gave Plaintiff until February 13, 2015, to file a written response of up to fifteen pages in length and scheduled a hearing for May 28, 2015. Id. at 2. Plaintiff filed a one-sentence response on February 13, 2015, stating: "This Affidavit/Declaration of Truth is lawful notification that I am not a vexatious litigant and is hereby made and filed in court of records." ECF No. 43 at 1. On February 16, 2015, the Court advanced the hearing on the order to show cause to March 12, 2015. ECF No. 42. Defendants filed their own responses on February 18, 2015, ECF No. 48 (response of SPS, BONY, and MERS), and February 20, 2015, ECF No. 52 (response of Countrywide and ReconTrust).
On February 2, 2015, Plaintiff filed a motion to recuse, requesting that the undersigned recuse herself under 28 U.S.C. § 144. ECF No. 32; see also ECF No. 37 (identical motion to recuse was filed again on February 4, 2015). Defendants opposed the motion on February 12, 2015, ECF No. 39 (opposition of SPS, BONY, and MERS), and February 17, 2015, ECF No. 46 (opposition of Countrywide and ReconTrust).
In their motions to dismiss, Defendants argue that Plaintiff's complaint should be dismissed on res judicata grounds. ECF No. 20 at 3-5; ECF No. 23 at 5-8. Plaintiff does not contend otherwise. ECF No. 40. In his motion to recuse, Plaintiff argues that the undersigned should recuse herself because "[t]he personal bias or prejudice of judge KOH will deprive Plaintiff of a fair trial in violation of the Due Process Clause." ECF No. 32 ¶ 6. Finally, the Court's order to show cause requested that Plaintiff, in light of his "pattern of filing voluminous, frivolous lawsuits in this district, ... show cause why the Court should not declare him a vexatious litigant." ECF No. 28 at 2. The Court proceeds to each in turn.
A. Motions to Dismiss: Res Judicata
"Res judicata, or claim preclusion, prohibits lawsuits on any claims that were raised or could have been raised in a prior action." Stewart v. U.S. Bancorp, 297 F.3d 953, 956 (9th Cir. 2002) (emphasis omitted). To determine the res judicata effect of Sepehry-Fard I and Sepehry-Fard II on the instant lawsuit, the Court looks to whether "there is (1) an identity of claims, (2) a final judgment on the merits, and (3) privity between parties." United States v. Liquidators of Eur. Fed. Credit Bank, 630 F.3d 1139, 1150 (9th Cir. 2011). Plaintiff does not dispute that all three prongs are met here.
1. Identity of Claims
To decide if there is identity of claims, courts in the Ninth Circuit apply four criteria: "(1) whether rights or interests established in the prior judgment would be destroyed or impaired by prosecution of the second action; (2) whether substantially the same evidence is presented in the two actions; (3) whether the two suits involve infringement of the same right; and (4) whether the two suits arise out of the same transactional nucleus of facts." Liquidators, 630 F.3d at 1150 (quoting Costantini v. Trans World Airlines, 681 F.2d 1199, 1201-02 (9th Cir. 1982)). The fourth criterion is the most important. Id. "Whether two events are part of the same transaction or series depends on whether they are related to the same set of facts and whether they could ...