Padron v. Onewest Bank, Case No. 2:14-cv-01340-ODW(Ex)
| Decision Date | 07 April 2014 |
| Docket Number | Case No. 2:14-cv-01340-ODW(Ex) |
| Parties | LILIAN YESENIA PADRON; RICHARD WEST; NANCY ARMSTRONG-WEST; LADISLAO KALMAR; IZASKUN GALARRAGA; JORGE ESPINOZA; ALBINA ESPINOZA; LUIS PEREZ; ROEGLIO HERNANDEZ; TERESA HERNANDEZ; AUDREY VINITSKY; EDWARD VINITSKY; LONNIE WALL; MARGARET LANAM; STEVEN ANDERSON; LORRIE ANDERSON; JILL RIDGWAY-BALL; ROBERT WHITMORE; FIONA WHITMORE; JOHN HICKS; KATHERINE WARD; DWAYNE BREWER; CLEADITH BREWER; DAVID CERDA PAZ; ROSA CERDA; DANIEL RUSSELL; MASATOSHI TAUCHI; MANUEL MARTINEZ; LILIA MARTINEZ; DANIEL GAMBLER; ALICE GAMBLER; JENNIFER CAROLAN; JOSE VELASCO; BEATRICE VELASCO; MELBA SAUNDERS; PAUL SAUNDERS; MARIA ALCANTAR; MIGUEL VEGA; CYNTHIA VEGA; RAGHDA ZAYER; MIKE MANOUGIAN; SIDNEY P. JACOBS; LYNN B. JACOBS; DONNA CASTY; WILLIAM BARTEL; WINIFRED BARTEL; GARY MILLEMAN; ROSALINDA MILLEMAN; ELIGITHA BALDONADO; ZABI SUBAT; ROSENDA CHAPMAN; GENARO LARIOS; SILVIA MEDINA RIVERA; ALEJANDRO MANZO; MARIA MANZO; WILLIAM LOWE; ANGEL ANDRADE; FELIPA ANDRADE; LEONIDA PAPA; VINCENT ADAMO; NAZARIO MADRIGAL; MILLICENT DICKINSON; TERRY SANNITA; RAYE SANNITA; TARYN COSS; SCOTT SEELIG; ROCIO SEELING; SCOTT JAKOVICH; VICTORIA JAKOVICH; EUNICE AKPAN; JOHN VIGLIOTTI; DEANNA VIGLIOTTI; HAYDEE LOPEZ; JESUS LOPEZ; ROLANDA WHITE; LUIS LOPEZ; OSCAR SANDOVAL; SONIA SANDOVAL; HUGO CARCAMO; CLAUDIA CARCAMO; ELVIRA BALUYOT; NOEL BALUOT; EDWARD VARENAS; NELINIA VARENAS; GLORIA CHARLES; FRANCISCO ROMO; FELIPE MURO; PAOLA MURO; DENNIS MICHAEL CHILCOAT; CAROL ANN CHILCOAT; PEARL BOWEN; MANUEL CALVILLO; HERACLIO GONZALEZ; MARICELA GONZALEZ; CARLETTA MCCRAY; TOMMIE MCCRAY; ALAN BERGUM; ROCIO BERGUM; IVORY RODRIGUEZ; FRANCISCA RODRIGUEZ; DIANA THAN; ENRIQUETA POLANCO; MARTIN LOZANO; CHARLES NAVARRO; DEBRA NAVARRO; NHU THUAN THI NGUYEN; JOSEFINA MARTINEZ; GILBERTO MURILLO; JANNET TORRES; IVAN SALAZAR; PORFIRIO CAMACHO; DONIDA GARZARO; NELSON MIGUEL; MALIETA MIGUEL; TEODORO ABUYO; JUANA TLATENCHI; FELIPE TLATENCHI; Q.C KELKER; FACUNDO ROSAS; CHIRSTINA RESINA, Plaintiffs, v. ONEWEST BANK; ONEWEST BANK GROUP LLC; INDYMAC BANK; INDYMAC MORTGAGE SERVICES; INDYMAC BANCORP, INC.; IMB HOLDCO; NDEX WEST, LLC; MERIDIAN FORECLOSURE SERVICE f/k/a MTDS, INC.; FEDERAL DEPOSIT INSURANCE CORPORATION; LANDAMERICA, INC.; DOES 1-1000, inclusive, Defendants. |
| Court | U.S. District Court — Central District of California |
One hundred and twenty-one Plaintiffs joined together in this action against Defendants OneWest Bank, FSB and various mortgage servicers, trustees, and an appraiser. Plaintiffs allege 24 claims, all essentially rooted in their allegations that OneWest and related entities "ceased acting as conventional money lenders and instead morphed into an enterprise engaged in systematic fraud upon its borrowers." (Compl. ¶ 3.) After Plaintiffs ignored one Order to Show Cause, the Court issued another, this time addressing whether Plaintiffs properly joined together under Federal Rule of Civil Procedure 20(a).
After considering Plaintiffs' response and related arguments in one of Defendants' Motions to Dismiss, the Court finds that Plaintiffs' claims do not involve the "same transaction or occurrence" and do not present common questions of law and fact sufficient for permissive joinder. The Court accordingly DISMISSES all Plaintiffs except for Lilian Yesenia Padron. The Court also declines to exercise supplemental jurisdiction over Padron's state-law claims and thus REMANDS them to Los Angeles County Superior Court.
On November 18, 2013, 121 plaintiffs filed the present action in Los Angeles County Superior against OneWest Bank, the successor to the failed IndyMac Bank. Plaintiffs also sued mortgage servicers, trustees, the Federal Deposit Insurance Corporation, and a real-estate appraiser. In their 99-page Complaint, Plaintiffs allege five causes of action consisting of 24 claims. The claims include fraudulent concealment; intentional misrepresentation; negligent misrepresentation; negligence; contract rescission; breach of contract; wrongful foreclosure; and violations of California's Unfair Competition Law; 15 U.S.C. § 1639e; 12 C.F.R. § 323.5; 15 U.S.C. § 1; California Code of Civil Procedure sections 580B and 726; and California Civil Code sections 1788 and 2994G. (Id.)
Plaintiffs essentially allege that "Defendants had ceased acting as conventional money lenders and instead morphed into an enterprise engaged in systematic fraud upon its borrowers." (Compl. ¶ 3.) Defendants allegedly placed Plaintiffs into loans which Defendants knew the borrowers could not afford, abandoned industry-standard underwriting guidelines, concealed or misrepresented the loan terms to borrowers to induce their consent, and intentionally inflated appraisal values through Defendant LandAmerica, Inc.—"knowing that their scheme would cause the precipitous decline in values of all homes throughout California." (Id.)
Plaintiffs also attached a voluminous, 264-page appendix to their Complaint. (Id. Ex. A.) Appendix A includes individual vignettes addressing each plaintiff's varied factual background, including the purchased property, loan terms and amount, representations made to the borrower, appraisal figure, modification attempts, and alleged damages. (Id.)
On February 21, 2014, OneWest Bank, FSB, OneWest Bank Group LLC, and IMB HoldCo LLC removed this action to this Court, invoking mass-action jurisdiction under the federal Class Action Fairness Act ("CAFA"), 28 U.S.C. § 1332(d). (ECF No. 1.) The Court subsequently ordered the parties to brief whetherCAFA's local-controversy exception under § 1332(d)(4)(A) applies to this action. (ECF No. 8.) No party responded, so the Court ordered the parties to show cause why the Court should not sanction them for ignoring the Court's Order. (ECF No. 12.) Defendants—but not Plaintiffs—responded to that Order, indicating reasons why the local-controversy exception would not apply. (ECF Nos. 13, 14.)
On March 21, 2014, the Court issued another Order to Show Cause, this time requiring Plaintiffs to address whether they properly joined together in one action under Rule 20(a). (ECF No. 15.) In the meantime, Defendants filed two Motions to Dismiss under Rule 12(b)(6)—in part addressing the Court's permissive-joinder concerns. (ECF Nos. 18, 19.) On April 3, 2014, Plaintiffs filed a response to the Court's Order. (ECF No. 21.)
Federal Rule of Civil Procedure 20(a) permits multiple plaintiffs to join their claims in one action if "they assert any right to relief jointly, severally, or in the alternative with respect to or arising out of the same transaction, occurrence, or series of transactions or occurrences," and "any question of law or fact common to all plaintiffs will arise in the action." Fed. R. Civ. P. 20(a); Coleman v. Quaker Oats Co., 232 F.3d 1271, 1296 (9th Cir. 2000). While the Rule does not provide specific guidance on how a court should apply permissive joinder, the Ninth Circuit has stated that the rule "is to be construed liberally in order to promote trial convenience and to expedite the final determination of disputes, thereby preventing multiple lawsuits." League to Save Lake Tahoe v. Tahoe Reg'l Planning Agency, 558 F.2d 914, 917 (9th Cir. 1977).
While all 121 Plaintiffs purport to join their claims together in this CAFA mass action, the Court finds that they have not established the prerequisites for permissive joinder under Rule 20(a). Joining such diverse and varied claims would also severelyprejudice Defendants and work a disservice to the Court, thereby further compelling the conclusion that Plaintiffs may not proceed together in one action.
The Ninth Circuit has stated that the first prong—addressing whether the plaintiffs' claims arise from the "same transaction, occurrence, or series of transactions or occurrences"—refers to the "similarity in the factual background" of the claims. Coughlin v. Rogers, 130 F.3d 1348, 1350 (9th Cir. 1997). Several courts considering what constitutes the "same transaction or occurrence" have relied upon the Eighth Circuit's interpretation in Mosley v. General Motors Corp., 497 F.2d 1330 (8th Cir. 1974), in which the court stated that Rule 20(a) permits Id. at 1333.
Plaintiffs contend that "all that must be shown to satisfy the first prong of the joinder statute [sic] is that the claims bear some logically [sic] relationship." (Response 3.) They assert that all of their claims arise from the same allegedly unlawful scheme, policy, or practice implemented by Defendants,1 such as Defendants' alleged price-fixing scheme in which they manipulated home values through residential appraisals and Defendants' practice of placing Plaintiffs into known dangerous loan products. Plaintiffs additionally argue that each of Plaintiffs' individual transactions and the alleged resulting injuries were the direct result of a common intentional practice or scheme implemented by Defendants/
But in their second Motion to Dismiss, Defendants cite to the Ninth Circuit's recent decision in Visendi v. Bank of America, 733 F.3d 870 (9th Cir. 2013), arguingthat the Court of Appeals has already held that plaintiffs may not join together in one action to sue common defendants based on discrete real-estate loan transactions.
In Visendi, 137 named plaintiffs sued 25 financial institutions in California state court. Id. at 866. The plaintiffs alleged that the defendants' deceptive mortgage lending and securitization practices decreased the value of their homes and otherwise caused them injury. Id. Defendants removed the case to federal court, invoking CAFA mass-action jurisdiction. Id. But the district court then remanded the case back to state court.
On appeal,...
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