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Oya v. Wells Fargo Bank, N.A.

United States District Court, S.D. California

September 19, 2019

AKI T. OYA and SOUCHI OYA, Plaintiffs,
v.
WELLS FARGO BANK, N.A., et al., Defendants.

          ORDER DENYING MOTION TO ALTER OR AMEND JUDGMENT [DOC. NO. 58]

          MARILYN L. HUFF, JUDGE

         On July 17, 2019, the Court issued an order granting Defendants Select Portfolio Servicing, Inc.’s and Wells Fargo Bank, N.A.’s (collectively, “Defendants”) motion to dismiss Plaintiffs Aki T. Oya’s and Souchi Oya’s (collectively, “Plaintiffs”) third amended complaint without leave to amend, as Plaintiffs could not cure the deficiencies in their complaint despite three opportunities to do so. (Doc. No. 56 at 11.) On August 15, 2019, Plaintiffs filed a motion to amend the judgment under Rule 59(e). (Doc. No. 58.) Defendants filed an opposition on September 9, 2019. (Doc. No. 59.) Plaintiffs filed their reply on September 16, 2019. (Doc. No. 62.) For the reasons below, the Court denies Plaintiffs’ motion to alter or amend the judgment.

         Background

         This is a motion to amend the Court’s judgment dismissing Plaintiffs’ claims related to Defendants’ efforts to conduct a foreclosure sale after Plaintiffs’ sixth consecutive bankruptcy petition. In April 2014, Plaintiffs defaulted on the deed of trust securing their residence, and they have made no payments since.[1] (Doc. No. 45-5 at 3.) Defendants recorded a notice of default on April 6, 2016, initiating foreclosure proceedings. (Doc. No. 45-3 at 65-67.) But Defendants were unable to conduct a foreclosure sale because Plaintiffs subsequently filed bankruptcy petitions on six separate occasions.[2] (See Doc. No. 43 at 85.)

         Plaintiffs filed their first bankruptcy petition on September 6, 2016. The bankruptcy court dismissed the case and all automatic stays were vacated January 20, 2017. (See Bankruptcy Petition No. 16-05492-CL13; Doc. No. 45-3 at 80.) Plaintiffs filed a second bankruptcy petition on October 18, 2017. The bankruptcy court dismissed the case on November 7, 2017. (See Bankruptcy Petition No. 17-06297-MM13; Doc. No. 43 at 85.) Plaintiffs filed a third case on February 15, 2017. The bankruptcy court dismissed the case on March 6, 2017 for failure to file required schedules, statements, a Chapter 13 plan, certificate of credit counseling, and a statement of current monthly income. (See Bankruptcy Petition No. 17-00783-CL13; Doc. No. 45-3 at 86.) Plaintiffs filed a fourth case on June 17, 2017, and the bankruptcy court dismissed it on June 26, 2017. (See Bankruptcy Petition No. 17-03553-MM13; Doc. No. 43 at 85.) Plaintiffs filed a fifth case on April 12, 2018, and the bankruptcy court dismissed the case on May 2, 2018 because Plaintiffs again failed to file schedules, statements, and a Chapter 13 plan. (See Bankruptcy Petition No. 18-02170-CL13; Doc. No. 45-3 at 92.)

         In Plaintiffs’ sixth bankruptcy petition, Plaintiff Aki T. Oya filed for bankruptcy protection on June 15, 2018, three days before the scheduled foreclosure date. (Doc. No. 43 ¶¶ 30–31.) Throughout the process of filing this petition, Plaintiffs did not provide documentation required by the bankruptcy court. (See id. at 85.)

         Defendants held the foreclosure sale on June 18, 2018 and sold the property for $915, 300. (Id. ¶¶ 41, 43.) On June 26, 2018, the purchaser filed a motion to retroactively annul the stay with the bankruptcy court. (Id. ¶ 52.) On July 3, 2018, the bankruptcy court dismissed Plaintiffs’ sixth bankruptcy petition because Plaintiff Aki T. Oya again did not file schedules, a statement of financial affairs, or a plan. (See id. at 85) On August 15, 2018, the bankruptcy court granted the purchaser’s motion to retroactively annul the stay and validate the foreclosure sale. (Id. ¶ 58.) On August 27, 2018, Plaintiffs filed a motion with the bankruptcy court for reconsideration of the order granting annulment of the stay. (Doc. No. 45-3.)

         The bankruptcy court granted in part and denied in part Plaintiffs’ motion for reconsideration on October 26, 2018. (Doc. No. 45-3 at 119-23.) It denied the motion to reconsider the bankruptcy court’s order “to the extent that the order annulled the stay as to [the purchaser], ” but the bankruptcy court noted “the absence of a motion by Wells Fargo to annul the stay as to it as well.” (Id. at 120-21.) Thus, the court granted reconsideration of its order retroactively validating the entirety of the June 18, 2018 sale, “without prejudice to Wells Fargo bringing its own stay annulment motion and requesting sale validation should annulment be granted.” (Id. at 121 n.4.) On March 8, 2019, Defendant Wells Fargo filed its motion for stay relief in the bankruptcy court. (Doc. No. 45-3 at 2-22.) On April 17, 2019, the bankruptcy court granted Defendant Wells Fargo’s motion and annulled the bankruptcy stay, granting both “prospective and retroactive stay relief.” (Doc. No. 45-5.)

         While Plaintiffs litigated the validity of the foreclosure sale, from August 15, 2018 to October 26, 2018, Defendant Select sent Plaintiffs billing statements for past due mortgage statements. (Id. ¶ 79.) Defendant Select sent a letter on September 28, 2018, noting that a foreclosure sale was set for November 14, 2018. (Id. ¶ 145; at 116.) Additionally, on October 1, 2018, a notice of trustee sale was recorded setting a sale date of November 18, 2018. (Id. ¶ 147.) On October 8, 2018, Defendants’ counsel sent a letter to Plaintiffs’ counsel informing them that the letter and notice of sale were inadvertently recorded and that “[t]he November 14, 2018 sale date will be canceled, regardless of the outcome of the Reconsideration Motion.” (Doc. No. 43 at 119-20.)

         During the bankruptcy court proceedings, Plaintiffs also filed a complaint in this Court on August 27, 2018. (Doc. No. 1.) Defendants filed a motion to dismiss Plaintiffs’ complaint on September 19, 2018. (Doc. No. 12.) On November 2, 2018, the Court granted Defendants’ motion to dismiss Plaintiffs’ complaint with leave to amend. (Doc. No. 21.) On December 3, 2018, Plaintiffs filed an amended complaint (Doc. No. 23), and Defendants filed their motion to dismiss on December 13, 2018. (Doc. No. 26.) On January 9, 2019, the Court granted Defendants’ motion to dismiss Plaintiffs’ amended complaint with leave to amend. (Doc. No. 25.) Plaintiffs filed a second amended complaint on January 20, 2019 (Doc. No. 31), and Defendants filed a motion to dismiss on February 4, 2019. (Doc. No. 32.) On March 25, 2019, the Court invited the parties to submit supplemental briefing due to the U.S. Supreme Court’s decision in Obduskey v. McCarthy & Holthus LLP, 139 S.Ct. 1029 (2019) (Doc. No. 39.) On April 19, 2019, the Court granted Plaintiffs’ motion to file an amended complaint. (Doc. No. 42.)

         Plaintiffs filed their third amended complaint on May 6, 2019 (Doc. No. 43), and Defendants filed a motion to dismiss Plaintiffs’ third amended complaint on May 21, 2019 (Doc. No. 45.) This Court granted Defendants’ motion to dismiss Plaintiffs’ third amended complaint without leave to amend, as Plaintiffs could not cure the deficiencies in their complaint despite three opportunities to do so. (Doc. No. 56 at 11.)

         Discussion

         I. Legal Standards

         Federal Rule of Civil Procedure 59(e) gives district courts the power to reconsider a previous ruling or entry of judgment. Rule 59(e) offers an “extraordinary remedy, to be used sparingly in the interests of finality and conservation of judicial resources.” Kona Enter. v. Estate of Bishop, 229 F.3d 877, 890 (9th Cir. 2000) (quoting 12 James Wm. Moore et al., Moore’s Federal Practice § 59.30[4] (3d ed. 2000)). Thus, “a motion for reconsideration should not be granted, absent highly unusual circumstances.” Id. These motions are only granted in the rare case where “(1) the district court is presented with newly discovered evidence, (2) the district court committed clear error or made an initial decision that was manifestly unjust, or (3) there is an intervening change in controlling law.” Ybarra v. McDaniel, 656 F.3d 984, 998 (9th Cir. 2011) (quoting Zimmerman v. City of Oakland, 255 F, 3d 734, 740 (9th Cir. 2001)). A Rule 59(e) motion “may not be used to relitigate old matters, or to raise arguments or present evidence that could have been raised prior to the judgment of entry.” Exxon Shipping Co. v. Baker, 554 U.S. 471, 485 n.5. (2008) (internal citation omitted); see also Weeks v. Bayer, 246 F.3d 1231, 1236 (9th Cir. 2001) (Rule 59(e) motion may not be used to reargue an issue already presented to the court to get a “second bite at the apple”).

         Plaintiffs do not identify any change in controlling law or newly discovered evidence. Instead, they submit their motion to amend or alter the judgment solely on claims that the court committed clear legal or factual error. (Doc. No. 58-1.) To establish clear error or manifest injustice, the reviewing court must be “left with the definite and firm conviction that a mistake has been committed.” Smith v. Clark Cty. Sch. Dist., 727 F.3d 950, 955 (9th Cir. 2013) (quoting United States v. U.S. Gypsum Co., 333 U.S. 364, 395 (1948)). “[M]ere dissatisfaction with the court’s order or belief that the court is wrong in its decision are not adequate grounds for relief.” SLPR, LLC v. San Diego Unified Port Dist., 2010 WL 2349204, at *1 (S.D. Cal. Jun. 8, 2010); see Twentieth Century-Fox Film Corp. v. Dunnahoo, 637 F.2d 1338, 1341 (9th Cir. 1981).

         II. Analysis

         A. Plaintiffs’ First Claim Under 11 U.S.C. § 362 and 11 U.S.C. § 1301.

         Plaintiffs argue that the Court’s decision on Plaintiffs’ first claim was made in clear error and is manifestly unjust for four reasons: (1) the Court improperly considered the “new argument” that the bankruptcy court’s retroactive relief under § 362(d) eliminates Defendants’ liability under § 362(k); (2) the Court misread Schwartz v. United States (In re Schwartz), 954 F.2d 569 (9th Cir. 1992); (3) the matter should be stayed pending Plaintiffs’ appeal of the bankruptcy court’s ruling; and (4) the Court ...


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