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Malifrando v. Real Time Resolutions, Inc.

United States District Court, E.D. California

May 26, 2017

FRANK MALIFRANDO, Plaintiff,
v.
REAL TFME RESOLUTIONS, INC., Defendants.

          ORDER TO SHOW CAUSE AND ORDER DISALLOWING AMENDMENT OF COMPLAINT

          GREGORY G. HOLLOWS UNITED STATES MAGISTRATE JUDGE.

         Introduction and Summary

         Plaintiff, proceeding pro se in this civil action, filed his complaint against defendants Real Time Resolutions, Inc. ["RTR"] and Long Beach Mortgage Company on December 21, 2015 alleging fraud, misrepresentation, violation of the FTC (Fair Trade Commission) Act and RESPA. ECF No. 1. Plaintiff has been proceeding on the basis throughout the litigation that current and proposed defendants acted unlawfully with respect to the mortgage(s) on the "subject property, " 842 Georgia Street, Vallejo, California. ECF No. 1 at 2, A, passim[1] e.g., "On or about October 11, 2004, Charlotte Macasarte.. .assisted Plaintiff with a loan application that would enable plaintiff to purchase Subject Property." ECF No. 1 at 4. See also ECF Nos. 24 at 1-2, 35 at 24, 41 at 4. Because the "subject property" is, in fact, apparently not the property at issue in this litigation, plaintiffs motion to amend the complaint, which purports to continue this error will be denied, and plaintiff is ordered to show cause why the action should not be dismissed.

         Order to Show Cause Based on Erroneous Designation of the “Subject Property”

         As set forth above, the subject property was defined as existing at the Georgia Street address, and the loan for that property was placed at issue. However, the loan application exhibit attached by plaintiff to support his February 21, 2017 motion to amend the complaint, ECF 35 references a different property, 515 Alabama St., Vallejo, CA. The proposed Second Amended Complaint, again designating the 842 Georgia St. address as the “subject property, ” and the alleged offending loan to that property as the loan at issue, nevertheless attaches the 515 Alabama St. loan application document, Exhibit 1, and the document in which plaintiff himself requested defendant RTR to give RESPA information (the gravamen of this lawsuit), on the 515 Alabama St property. Exhibit 3 to the Proposed Second Amended Complaint. RTR responded to this request and referenced the loan number for the 515 Alabama St. property. Exhibit 2 to the Proposed Second Amended Complaint.

         In documents to which the undersigned previously allowed judicial notice, the property at issue again indicates that real property at 515 Alabama St. is the property possibly at issue. ECF 22. It may well be that none of the defendants have anything to do with the “subject property” as defined by plaintiff.

         Complaints are important documents. They stand as the vehicle to bring the power of the United States judicial system to bear upon persons/entities that have committed a wrong, or conversely, having committed no wrong to the plaintiff, must nevertheless bear expense and turmoil to demonstrate that fact. At the very least, the initial charging document must be thought out and accurate. Plaintiff is therefore ordered to show cause why this action should not be dismissed as being based on a completely inaccurate premise, i.e., that defendants unlawfully enforced, impacted or affected a loan given for the 842 Georgia St. “subject property.”

         Motion to Amend

         Clearly, the court would not permit the proposed Second Amended Complaint to be filed given the dispositive inaccuracy in it regarding the loan at issue. However, even if plaintiff were to formally assert that the “subject property” is now in fact the Alabama St. property, the undersigned would not permit the proposed amended filing as it is clearly barred by law of the case, and also, for the proposed new defendant, a lack of appropriate allegations demonstrating successor liability.

         Procedural History

         On March 3, 2016 defendant RTR moved to dismiss the action, ECF No. 5 and on July 14, 2016 the court issued an Order granting the motion in part by (1) recommending dismissal of the FTC claim with prejudice on the ground that there is no private right of action under the FTC, ECF No. 17 at 8:7-9:7; 11:25-26; (2) dismissing the remainder of the complaint with leave to amend within 28 days of the date of the Order, recommending that the FTC claim be dismissed with prejudice and directing plaintiff to request entry of default and thereafter to move for default judgment as to defendant Long Beach Mortgage Co., [2] which had been served with the Complaint but had not answered. Id. at 11:20-24. Although the court cautioned the parties that any failure to object to the Findings and Recommendations might waive the right to appeal the District Court's Order, id. at 11:17-12:7, no objections were received. On August 16, 2016, the District Court issued an Order adopting the Findings and Recommendations in full. ECF No. 19.

         Plaintiff filed his First Amended Complaint on August 9, 2015, ECF No. 18, and RTR again moved to dismiss on September 6, 2015. ECF No. 20. That Motion was accompanied by a Request for Judicial Notice of various documents related to the loan underlying the action. ECF No. 22. On November 29, 2016 the court entered its Findings and Recommendations on the Motion to Dismiss, ECF No. 33, in which it granted RTR's Request for Judicial Notice, recommended that plaintiff's fraud and misrepresentation claims be dismissed without leave to amend as barred by the applicable California statute of limitations, dismissed all claims against Long Beach Mortgage Company, and directed RTR to file an answer to plaintiff's RESPA claim as it had been “narrowly defined” in the findings and recommendations. Again, the parties were permitted to file objections within 20 days of the service of the Findings and Recommendations and warned of the consequences if they failed to do so. RTR filed objections on December 19, 2016, ECF No. 34, and plaintiff followed suit on March 21, 2017. ECF No. 38. Of importance to the instant proceeding is the fact that while plaintiff objected to elements of the Order, he did not challenge the dismissal of the fraud and misrepresentation claims without leave to amend. On March 23, 2017 the District Court entered an Order adopting the Findings and Recommendations in full, including the dismissal of the fraud and misrepresentation claims. ECF No. 39.

         On March 31, 2017, plaintiff moved for leave to file his Second Amended Complaint, ECF No. 41, and to add Deutsch Bank of Americas Holding Corp. as a defendant. ECF No. 40. RTR opposed the motion on April 19, 2017, ECF No. 42, and filed an Answer to the RESPA Claim in the First Amended Complaint on April 21, 2017. ECF No. 43.

         Factual Background

         A. Factual Allegations from the First Amended Complaint

         As they are summarized in this court's Order and Findings and Recommendations of November 29, 2016, ECF 33 at 2:2-3:8 as follows:

“[The First Amended Complaint] alleges that on October 11, 2004, plaintiff obtained a mortgage loan from Long Beach Mortgage Company[3] (“Long Beach”), which was secured by real property located at 842 Georgia Street, Vallejo, California.[4] (FAC, ECF No. 18 at ¶¶ 3, 13.) According to the FAC, although approving the loan, Long Beach determined that a second mortgage was required in the amount of $67, 000 by fraudulently falsifying plaintiff's loan application and income, falsely listing his employer as MEGALYNX, a company he did not work for, falsely stating plaintiff had an account with Bank of America, falsely stating that plaintiff owned other real estate worth $834, 000, and forging plaintiff's signature on the loan application. Id. at ¶¶ 15- 21. The FAC further alleges that Long Beach inflated the value of the subject property without conducting a proper audit. Id. at ¶22. Plaintiff alleges that Long Beach “subsequently went out of business” and GMAC thereafter serviced both loans. Id. at ¶¶ 24-25. Plaintiff claims he was unaware of the second loan until sometime after April, 2015 when he submitted a Qualified Written Request (“QWR”) to Real Time and received a copy of his original loan application. Id. at ¶ 32. The FAC states that defendant Real Time serviced the loan subsequent to Long Beach, [5] [but] plaintiff eventually could not pay the loan and fell into default, and was forced to file for bankruptcy protection. Id. at ¶¶ 26-28.
Plaintiff alleges that he has sent QWRs to Real Time but that Real Time failed to respond in a satisfactory manner, including failing to provide updated assignments of ownership, proof of its custodial servicing obligations, “proof of purchase, affidavit of sale, and proper documentation detailing restructure of assignments to deed of trust, ” as well as payment history indicating plaintiff's actual balance. Id. at ¶ 29.
The FAC contains claims of fraud and misrepresentation against Real Time and Long Beach, and a claim against Real Time for violations of the Real Estate Settlement Procedures Act (“RESPA”). The FAC alleges diversity jurisdiction, and seeks injunctive relief to prevent foreclosure on the subject property, an order modifying the terms of the loan to an affordable amount that reflects plaintiff's ...

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