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Reed v. U.S. Ban N.A.

United States District Court, N.D. California

May 8, 2015

RICHARD REED, et al., Plaintiffs,
v.
US BAN N.A., et al., Defendants.

ORDER GRANTING DEFENDANTS' MOTION TO DISMISS Re: Dkt. No. 37

VINCE CHHABRIA, District Judge.

The motion to dismiss is granted.

The plaintiffs' first amended complaint fails to state a claim because the complaint names three distinct entities as defendants but fails to differentiate between these multiple defendants. See In re Sagent Tech., Inc., Derivative Litig., 278 F.Supp.2d 1079, 1094 (N.D. Cal. 2003) ("[T]he complaint fails to state a claim because plaintiffs do not indicate which individual defendant or defendants were responsible for which alleged wrongful act."). Moreover, to the extent that the plaintiffs' claims rest on a theory of successor liability, the complaint fails to adequately plead facts necessary to support this theory. See Butler v. Adoption Media, LLC, 486 F.Supp.2d 1022, 1066 (N.D. Cal. 2007). Because the complaint must be dismissed on these grounds alone, the Court does not reach the additional arguments that defendants raise in their motion to dismiss.

Accordingly, the motion to dismiss is granted. But because it does not appear that amendment would be futile, the dismissal is with leave to amend. Should the plaintiffs wish to file an amended complaint, they must do so within 21 days of the date of this order or the dismissal will be with prejudice.[1]

In addition, in their reply in support of their motion to dismiss, the defendants raised for the first time the possibility that a number of the claims in the plaintiffs' operative complaint are barred by the judgment in Chase's favor in the plaintiffs' prior state court action. (The defendants only learned of this action after filing their motion to dismiss.) Although the Court ordered the plaintiffs to file a sur-reply on the issue of the preclusive effect of this prior judgment, the parties have not yet had the opportunity to fully brief this issue. Without the benefit of full briefing from both parties, the Court does not reach this issue. However, the Court notes that, contrary to the plaintiffs' representation in their sur-reply on the issue of res judicata/collateral estoppel, under California law the Superior Court's judgment in the defendants' favor serves as a final judgment on the merits. See Janson v. Deutsche Bank Nat'l Trust Co., No. 14-CV-05639 JSC, 2015 WL 1250092, at *10 (N.D. Cal. Mar. 18, 2015). Furthermore, the plaintiffs contended in their sur-reply that an intervening change in the law means that they are not now precluded from reasserting claims based on Chase's conduct. But the plaintiffs cited only federal case law in support of this proposition, and the preclusive effect of the prior state court judgment is governed by California law. See City of Martinez v. Texaco Trading & Transp., Inc., 353 F.3d 758, 762 (9th Cir. 2003). And the California Supreme Court has held that res judicata applies even if the law changes between the first and second lawsuit. See, e.g., Slater v. Blackwood, 543 P.2d 593, 595 (Cal. 1975).[2]

Accordingly, if the plaintiffs choose to file an amended complaint, and if the amended complaint asserts claims that were brought or could have been brought in the prior lawsuit, counsel for the plaintiffs must have a good-faith basis for believing that those claims are not barred under the doctrines of res judicata and/or collateral estoppel. See Fed.R.Civ.P. 11(b).

IT IS SO ORDERED.


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