United States District Court, N.D. California
ORDER GRANTING MOTION FOR LEAVE TO AMEND, DENYING
MOTION TO DISMISS AS MOOT RE: DKT., 42, 67
Gonzalez Rogers United States District Court Judge.
3, 2016, plaintiffs Ofa Taimani and Elizabeth Kioa filed a
complaint against defendant Residential Mortgage Loan Trust
and several others, alleging twelve claims arising from
defendants' actions preceding to the allegedly wrongful
foreclosure of plaintiffs' property. (Dkt. No. 1).
Plaintiffs amended their complaint on August 19, 2017. (Dkt.
No. 25). Defendants filed a motion to dismiss, or, in the
alternative for a more definite statement on January 20,
2017, arguing that the claims in the amended complaint (1)
are barred under the doctrine of claim preclusion, (2) do not
allege wrongful conduct by the defendants, and (3) fail as a
matter of law. (Dkt. No. 42, Motion to Dismiss). Plaintiffs
filed their opposition on February 12, 2017. (Dkt. No. 57).
Defendants' filed their reply on February 28, 2017. (Dkt.
No. 59). On March 30, 2017, plaintiffs moved to substitute
attorney Arasto Farsad in place of Ofa Taimai and Elizabeth
Koa, who had previously proceeded pro se. (Dkt. No.
before the Court is plaintiffs' Motion for Leave to File
a Second Amended Complaint. (Dkt. No. 67, “Motion for
Leave to File SAC”). Defendants filed their opposition
on April 17, 2017, arguing that plaintiffs' motion should
be denied, or, in the alternative, denied until
defendant's pending Motion to Dismiss is heard. (Dkt. No.
74, Opposition). Plaintiff filed their reply on April 21,
2017. (Dkt. No. 75). Having carefully considered the
pleadings and the papers submitted on the motion, and for the
reasons set forth below, the Court Grants
plaintiffs' motion for leave to file a Second Amended
Complaint, and Denies the Motion to Dismiss
Federal Rule of Civil Procedure 15(a)(2), leave to amend a
pleading "shall be freely given when justice so
requires." Federal Rule of Civil Procedure §
15(a)(2). The Ninth Circuit has held that “Rule
15's policy of favoring amendments to pleadings should be
applied with ‘extreme liberality.'” DCD
Programs, Ltd. v. Leighton, 833 F.2d 183, 186 (9th Cir.
1987); See also Eminence Capital, LLC v. Aspeon,
Inc., 316 F.3d 1048, 1052 (9th Cir. 2003); United
States v. Webb, 655 F.2d 977, 979 (9th Cir. 1981);
Cooper Development Co. v. Employers Insurance of
Wausau, 765 F.Supp. 1429, 1432 (N.D. Cal. 1991) (courts
have been "quite liberal" in granting leave to
amend). “Four factors are commonly used to determine
the propriety of a motion for leave to amend. These are: bad
faith, undue delay, prejudice to the opposing party, and
futility of amendment.” DCD Programs, Ltd. v.
Leighton, 833 F.2d 183, 186 (9th Cir. 1987) (citing
Loehr v. Ventura Cty. Cmty. Coll. Dist., 743 F.2d
1310, 1319 (9th Cir. 1984)).
argue that leave to file a SAC should be granted because: (1)
the SAC, drafted by newly-retained counsel, seeks to correct
deficiencies in plaintiffs' pro se complaint;
(2) the SAC removes causes of action that counsel believes
have little or no merit; (3) the new causes of action are all
related to California's strict non-judicial foreclosure
statute; and (4) defendants will not be prejudiced, and may
in fact benefit because the SAC narrows the scope and issues
in this case.
counter that plaintiffs' motion for leave to file a SAC
should be denied on two grounds: (1) claims raised in the SAC
are barred by the doctrine of claim preclusion, and (2) the
motion is an effort to delay, hinder, and otherwise avoid
legitimate foreclosure proceedings. Regarding the first
issue, defendants contend that the allegations in the SAC are
based on facts that occurred in 2012 and 2013, and,
therefore, were or could have been raised in plaintiffs'
original state court action. This argument is prominent in
defendants' motion to dismiss as well. Although the
doctrine of claim preclusion may ultimately bar
plaintiffs' claims in this case, the Court finds that
plaintiffs, now represented by counsel, ought to have an
opportunity to amend their complaint and articulate their
claims as coherently as possible, because “justice so
requires.” See Federal Rule of Civil Procedure
§ 15(a)(2). This is especially true because the Superior
Court of California sustained defendants' demurrer based
on the “somewhat intelligible and difficult to
follow” nature of plaintiffs' complaint. (Dkt. No.
75-1, Superior Court Demurer to Complaint Sustained).
the second issue, defendants have made no showing that
plaintiffs' Motion for Leave to File a SAC is the product
of bad faith, prejudice, or undue delay. See DCD
Programs, Ltd. v. Leighton, 833 F.2d at 186. Rather,
they focus mainly on plaintiffs' prior bankruptcy
filings, which are not relevant here. Defendants recognize
that leave to amend under Rule 15(a) is liberally construed,
and, as such they themselves are “reluctant to formally
oppose Plaintiffs' request.” (Opposition at 2). And
rightly so. In their motion to dismiss, defendants complain
that plaintiffs' claims “make no attempt to
distinguish among the various named defendants or allege how
any of them are liable to Plaintiffs.” (Motion to
Dismiss at 15). Granting leave to file a SAC will afford
plaintiffs an opportunity to address this concern. Further,
after years of proceeding pro se, plaintiffs have
now retained counsel. Under Rule 15, plaintiffs, now with the
benefit of legal representation, should have an opportunity
to file an amended complaint.
foregoing reasons, the Court Grants plaintiffs' motion
for leave to file a SAC. In light of the filing of the
amended complaint, defendants' pending Motion to Dismiss
is Denied as moot.
the concerns about delay, plaintiffs shall file the proposed
SAC within two business days of the date of this order.
Defendants may respond as expeditiously as they would like,
but in no event later than twenty-one days thereafter.
Order terminates Dkt. Nos. 42 and 67. The hearing set for ...