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Shetty v. Lewis

United States District Court, N.D. California, San Jose Division

March 30, 2017

MICHAEL ALLEN LEWIS, et al., Defendants.



         Plaintiff Niki-Alexander Shetty, proceeding pro se, sues Defendants First American Title Company (“First American”), M. Lewis, Inc., and Michael Allen Lewis (“Lewis Defendants”), for violations of the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq., following Defendants' commencement of non-judicial foreclosure proceedings on real property located at 22 Porter Way, Royal Oaks, California (“the property”). Shetty also asserts a number of state law claims challenging the foreclosure and seeking to quiet title to the property.

         First American and the Lewis Defendants separately move to dismiss the operative first amended complaint (“FAC”) under Federal Rule of Civil Procedure 12(b)(6). Shetty opposes those motions and moves to strike a supplemental brief filed by the Lewis Defendants in connection with their motion to dismiss.

         For the reasons discussed below, the Court GRANTS Shetty's motion to strike, GRANTS Defendants' motions to dismiss the FDCPA claim without leave to amend, DECLINES to exercise supplemental jurisdiction over the state law claims, and DISMISSES the action.


         The property that lies at the heart of this action has been owned by an immigrant couple named Heriberto and Maria Elena Martinez for twenty-five years. FAC ¶ 17, ECF 63. The Martinezes have operated a business called the Mexico Meat Market on the property during that time. Id. ¶ 19. In August 2007, the Martinezes refinanced the property by means of a Note secured by a Deed of Trust on the property. Id. ¶¶ 17-26; Exh. L (Note); Exh. M (Deed of Trust); Exh. N (Recorded Deed of Trust). The Note identified Santa Cruz Title Company as the Trustee and Defendant M. Lewis, Inc. as the Beneficiary. Exh. L to FAC (Note). Defendant M. Lewis Inc. later substituted Defendant First American as the Trustee. Exh. X to FAC (Substitution of Trustee).

         Shetty claims that in February 2016, the Martinezes executed a Grant Deed transferring title to themselves and Shetty as joint tenants. Exh. A to FAC (Grant Deed). Shetty's pleadings do not explain why the Martinezes granted him an interest in the property, apparently for $0.00 based on the face of the Grant Deed. In March 2016, the Lewis Defendants issued a Notice of Default and Election to Sell under Deed of Trust, which was recorded by First American. Exh. Y to FAC (Notice of Default).

         Shetty filed this action in June 2016, challenging the non-judicial foreclosure and seeking to quiet title to the property in himself as owner in fee. See Compl., ECF 1. The Court granted Defendants' motions to dismiss the complaint for failure to state a claim upon which relief may be granted. See Order Granting Defendants' Motions to Dismiss with Leave to Amend, ECF 62. The Court determined that Shetty had not pled facts showing complete diversity of citizenship and that his asserted federal claims were not viable. Id. In particular, the Court found that Shetty could not state a claim under the Thirteenth Amendment to the United States Constitution, prohibiting involuntary servitude, or under various federal criminal statutes recited in the complaint. Id. at 3-4. Absent a viable federal claim, the Court declined to exercise supplemental jurisdiction over Shetty's state law claims. Id. at 4.

         The Court granted Shetty leave to amend based upon his representations that he could allege a federal claim under the FDCPA and could join the Martinezes as parties. Id. at 5-6. The Court expressly conditioned leave to amend on Shetty's joinder of the Martinezes based on their ownership interest in the property and the Court's concern that they may not be aware of this lawsuit. Id. Shetty filed the operative FAC on December 2, 2016, asserting a single federal claim under the FDCPA and numerous state law claims. He did not join the Martinezes as parties.


         A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted ‘tests the legal sufficiency of a claim.'” Conservation Force v. Salazar, 646 F.3d 1240, 1241-42 (9th Cir. 2011) (quoting Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001)). When determining whether a claim has been stated, the Court accepts as true all well-pled factual allegations and construes them in the light most favorable to the plaintiff. Reese v. BP Exploration (Alaska) Inc., 643 F.3d 681, 690 (9th Cir. 2011). However, the Court need not “accept as true allegations that contradict matters properly subject to judicial notice” or “allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences.” In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008) (internal quotation marks and citations omitted). While a complaint need not contain detailed factual allegations, it “must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is facially plausible when it “allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id.


         Shetty's FAC asserts federal jurisdiction based on both diversity of citizenship and federal question. He has not alleged facts showing complete diversity of citizenship between himself and Defendants. See 28 U.S.C. § 1332(a) (“The district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75, 000, exclusive of interest and costs, and is between . . . citizens of different States.”). To the contrary, he alleges facts showing that he and at least some of the Defendants are citizens of California. FAC ¶¶ 1-9. Accordingly, the only potential basis for this Court's subject matter jurisdiction is federal question jurisdiction. The FAC contains one substantive federal claim, Claim 1, which is asserted under FDCPA. That claim is discussed in detail in section III.B., below.

         The Court notes that Claim 13 is asserted under the Declaratory Judgment Act, 28 U.S.C. § 2201(a). “[T]he Declaratory Judgment Act does not by itself confer federal subject-matter jurisdiction.” Nationwide Mut. Ins. Co. v. Liberatore, 408 F.3d 1158, 1161 (9th Cir. 2005). A plaintiff asserting a declaratory judgment action must plead an independent basis for subject matter jurisdiction. Id. The FAC also contains stray references to federal statutes, which are insufficient to confer subject matter jurisdiction. For example, paragraph 111 of the FAC mentions 18 U.S.C. § 1951, a criminal statute addressing “Interference with commerce by threats or violence” which does not provide for a private right of action. Paragraph 111 also mentions 18 U.S.C. § 1961(1), which defines “racketeering activity” for purposes of the Racketeer Influenced and Corrupt Organizations Act (“RICO”). There is no indication on this record that Shetty intends to or could allege a RICO claim. Finally, Paragraph 112 of the FAC references 18 U.S.C. § 1954, a statute titled “Offer, acceptance, or solicitation to influence operations of employee benefit plan” which does not appear to have any relevance to the facts of this case.

         Thus subject matter jurisdiction depends on the FDCPA claim.

         A. Procedural Issues

         Before turning to Defendants' arguments regarding the FDCPA claim, the Court addresses two procedural issues. First, Defendants ask the Court to disregard Shetty's opposition briefs (ECF 73, 74) as untimely. Second, Shetty asks the Court to disregard the Lewis Defendants' supplemental brief (ECF 72).

         1. Shetty's Untimely Opposition Briefs

         First American's motion to dismiss was filed on December 16, 2016 and the Lewis Defendants' motion to dismiss was filed on December 19, 2016, making any opposition briefs due by December 30, 2016 and January 3, 2017, respectively. See Civ. L.R. 7-3(a) (“opposition must be filed and served not more than 14 days after the motion was filed”). Shetty filed opposition to First American's motion on March 7, 2017 and to the Lewis Defendants' motion on March 6, 2017, both approximately nine weeks late. Shetty did not obtain leave of the Court to file late oppositions and he has not explained why his briefs were untimely. “[P]ro se litigants are bound by the rules of procedure.” Ghazali v. Moran, 46 F.3d 52, 54 (9th Cir. 1995). The Court therefore would be well within its discretion to strike Shetty's opposition briefs. However, given Shetty's pro se status and the lack of prejudice to Defendants, the Court in the exercise of its discretion has considered the opposition briefs.

         2. Lewis Defendants' Unauthorized Supplemental Brief

         The Lewis Defendants filed a supplemental brief on March 5, 2017, more than two months after they filed their motion to dismiss. The supplemental brief was not authorized by the Court's Civil Local Rules, see Civ. L.R. 7-3, and the Lewis Defendants did not seek leave of the Court to file it. For those reasons, and because consideration of the supplemental brief is not necessary to the Court's disposition of ...

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