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Eisenberg v. Citibank N.A.

United States District Court, C.D. California

February 8, 2017

KATHLEEN ANGEL EISENBERG
v.
CITIBANK N.A.; ET AL.

          Present: The Honorable CHRISTINA A. SNYDER, JUDGE

          CIVIL MINUTES - GENERAL

         Proceedings: (IN CHAMBERS) - PLAINTIFF'S MOTION FOR RECONSIDERATION (Dkt. 132, Filed December 27, 2016)

         The Court finds this motion appropriate for decision without oral argument. Fed.R.Civ.P. 78; Local Rule 7-15. Accordingly, the hearing date of February 13, 2017, is vacated, and the matter is hereby taken under submission.

         I. INTRODUCTION AND BACKGROUND

         On February 8, 2013, Kathleen Eisenberg filed the instant action in Los Angeles County Superior Court against Citibank, N.A., as trustee for American Home Mortgage Assets Trust 2006-4 Mortgage-Backed Pass-Through Certificates Series 2006-4 (“Citibank”); Homeward Residential, Inc. (“Homeward”); Power Default Services, Inc. (“Power”); and Does one through 40, inclusive. Dkt. 1. The original complaint alleged four claims, namely, (1) rescission, (2) breach of contract, (3) unfair business practices pursuant to California's Unfair Competition Law (“UCL”), California Business and Professions Code §§ 17200 et seq., and (4) declaratory relief. The gravamen of plaintiff's claims is that she was fraudulently induced into an adjustable rate mortgage whereby, unbeknownst to her, her loan payments were all but guaranteed to dramatically increase a few years after the mortgage was executed. Plaintiff's complaint seeks to recover damages, rescind the adjustable rate mortgage instrument, and prevent the foreclosure of her home at 25431 Prado De Las Fresas, Calabasas CA 91302.

         On February 8, 2013, the Los Angeles Superior Court issued a Temporary Restraining Order enjoining foreclosure on the Property. Dkt. 1 at 74. On February 25, 2013, the Superior Court held a hearing regarding the issuance of a preliminary injunction. Dkt. 1 at 62. Defendants failed to oppose the preliminary injunction or appear for the hearing. Id. The Superior Court issued a preliminary injunction against defendants enjoining them from foreclosing upon the Property during the pendency of this action. Id.

         On March 13, 2013, defendants removed the case to this Court. Dkt. 1. On March 15 2013, defendants filed a motion to dismiss the complaint, dkt. 3, which the Court granted, dkt. 17. On May 28, 2013, plaintiff filed a First Amended Complaint (“FAC”). Dkt. 24. On May 29, 2013, defendants filed a motion to dismiss the FAC. Dkt. 25. The Court took the motion to dismiss the FAC under submission while the parties engaged in negotiation to see if a modification of plaintiff's home loan was possible. On June 15, 2016, after more than two years of failed negotiations, the Court granted, in part, and denied, in part, defendants' motion to dismiss the FAC. The Court dismissed plaintiff's claims for rescission and violation of the UCL. Dkt. 89. On August 24, 2016, plaintiff filed a Second Amended Complaint (“SAC”). Dkt. 108. On August 29, 2016, defendants filed a motion to dismiss the claims in the SAC for rescission and violation of the UCL. Dkt. 109.

         On October 21, 2016, defendants filed a motion seeking dissolution or modification of the preliminary injunction issued in this action by the Superior Court in 2013. Dkt. 118.

         On October 31, 2016, the Court dismissed plaintiff's claims for rescission and violation of the UCL for failure to state a claim with sufficient particularity, Fed.R.Civ.P. 9(b), and because they are barred by the applicable statute of limitations. Dkt. 121. During the hearing on the motion to dismiss the SAC, plaintiff's counsel requested an opportunity to confer with his client and determine whether or not he would seek leave to further amend the pleadings. Accordingly, the Court ordered that:

Plaintiff's counsel shall confer with plaintiff and file a declaration no later than ten (10) days from the issuance of this order explaining whether or not the foregoing defects can be cured. Thereafter, if plaintiff contends that the foregoing defects can be cured, the SAC shall be dismissed without prejudice and plaintiff is granted an additional ten (10) days leave in which to file a Third Amended Complaint. If plaintiff determines that the foregoing defects cannot be cured, then plaintiff's SAC shall be dismissed with prejudice.

Dkt. 121 at 11 (emphasis in original).

         On November 10, 2016, plaintiff's counsel, Mark Goodfriend, filed a declaration indicating that he believed the defects in the SAC could be cured in the filing of a Third Amended Complaint (“TAC”). Dkt. 123 (“Prior Goodfriend Decl.”). Goodfriend further indicated that he would file a TAC no later than November 21, 2016. In his declaration, Goodfriend, stated:

Notwithstanding the foregoing, if in the final analysis, on or before November 21, 2016, Plaintiff ultimately concludes that she is unable to cure the defects in the Second Amended Complaint identified by the Court, she will not file a Third Amended Complaint, and in that event, it is understood that the first and third causes of action for rescission and unfair business practices, respectively, of the Second Amended Complaint shall be deemed dismissed with prejudice.

         Prior Goodfriend Decl. ¶ 5. Thereafter, plaintiff did not file a TAC.

         On November 29, 2016, the Court granted defendants' motion to dissolve the preliminary injunction, dkt. 129, and, in light of plaintiff's failure to timely file a TAC, dismissed plaintiff's claims for rescission and violation of the UCL with prejudice, dkt. 130.

         On December 27, 2016, plaintiff filed a motion seeking leave to file an untimely TAC adding four paragraphs of allegations purportedly curing the deficiencies in plaintiff's claims for rescission and violation of the UCL. Dkt. 132 (“Motion”). Plaintiff's motion seeks reconsideration of the Court's order dismissing the claims for rescission and violation of the UCL. The Motion also seeks reconsideration of the Court's order dissolving the preliminary injunction. Id. In support of the Motion, Goodfriend has submitted a declaration in which he states:

Distracted by other legal matters, including in particular a pending sale of a property for over $35 million which was due to close November 30, 2016, over which there was heated litigation and settlement discussions, I inadvertently missed the November 21, 2016 deadline for filing a Third Amended Complaint. I realized that I missed it on November 23, 2016, but due to the holidays and other ...

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