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Horowitz v. Stewart Title Guaranty Co.

United States District Court, D. Hawaii

December 21, 2018

LEONARD G. HOROWITZ, an individual; SHERRI KANE, an individual; ROYAL BLOODLINE OF DAVID, a dissolved corporation sole, Plaintiffs,
v.
STEWART TITLE GUARANTY COMPANY; FIRST AMERICAN TITLE CO., and DOES 1 through 50, Inclusive, Defendants.

         ORDER DENYING PLAINTIFFS' OBJECTIONS AND AFFIRMING THE MAGISTRATE JUDGE'S (1) ORDER DENYING PLAINTIFFS LEONARD G. HOROWITZ AND SHERRI KANE'S MOTION FOR LEAVE TO FILE PROPOSED SECOND AMENDED COMPLAINT FOR DAMAGES AND OTHER RELIEF [FRCP 15(A)(2)]; (2) FINDING AND RECOMMENDATION TO DISMISS THIS ACTION WITH PREJUDICE

          LESLIE E. KOBAYASHI UNITED STATES DISTRICT JUDGE

         On May 3, 2018, the magistrate judge filed his

         (1) Order Denying Plaintiffs Leonard G. Horowitz and Sherri Kane's Motion for Leave to File Proposed Second Amended Complaint for Damages and Other Relief [FRCP 15(a)(2)]; (2) Finding and Recommendation to Dismiss this Action with Prejudice (“F&R”). [Dkt. no. 95.] Pro se Plaintiffs Leonard G. Horowitz and Sherri Kane (“Plaintiffs”) filed their objections to the F&R (“Objections”) on May 14, 2018. [Dkt. no. 96.] On May 29, 2018, Defendant Stewart Title Guaranty Company (“Stewart Title”) and Defendant First American Title Co. (“First American”) filed their respective responses to the Objections (“Stewart Title Response” and “First American Response”). [Dkt. nos. 99, 100.] Plaintiffs filed a supplement to the Objections on August 20, 2018. [Dkt. no. 103.] Stewart Title and First American filed their respective responses to the Supplement to Objections (“Stewart Title Supplemental Response” and “First American Supplemental Response”) on September 4, 2018. [Dkt. nos. 107, 108.] The Court has considered the Objections without a hearing pursuant to Rule LR7.2(e) of the Local Rules of Practice of the United States District Court for the District of Hawai`i (“Local Rules”). Plaintiffs' Objections are hereby denied and the F&R is hereby affirmed for the reasons set forth below.

         BACKGROUND

         Plaintiffs and the Royal Bloodline of David (“Royal”) filed their original complaint on December 21, 2016. [Dkt. no. 1.] On January 4, 2017, Plaintiffs and Royal filed a document that was construed as their Amended Complaint. [Dkt. nos. 10, 11.] On January 17 and 20, 2017, First American and Stewart Title filed their respective motions to dismiss the Amended Complaint (collectively, “Motions to Dismiss”). [Dkt. nos. 19, 23.] On June 30, 2017, this Court issued an order granting the Motions to Dismiss in part and denying them in part (“6/30/17 Order”). [Dkt. no. 39.[1]

         In the 6/30/17 Order, this Court ruled that Plaintiffs could not represent Royal in a pro se capacity, and Royal's claims were dismissed without prejudice to the filing of a separate action through an attorney. [6/30/17 Order at 7-8.] Further, this Court dismissed the claims Plaintiffs brought in their individual capacities. [Id. at 13.] Plaintiffs were given until July 31, 2017 to file a second amended complaint. [Id. at 14-15.] The magistrate judge subsequently issued an order extending that deadline to October 2, 2017. [Dkt. no. 43.]

         On September 29, 2017, Plaintiffs and Royal - through Horowitz as Royal's “Overseer” - filed a document tiled “Motion for Leave to File ‘Second Amended Verified Complaint;' [FRCP Rule 15(a)(2)]” (“9/29/17 Motion for Leave”). [Dkt. no. 53.] On December 14, 2017, the magistrate judge filed an order denying the 9/29/17 Motion for Leave, but allowing only Plaintiffs to file another motion for leave by January 5, 2018 (“12/14/17 Order”). [Dkt. no. 68.] Plaintiffs' deadline was later extended to February 28, 2018. [EO, filed 2/8/18 (dkt. no. 80).[2]

         On February 26, 2018, Plaintiffs filed the “Motion for Leave to File Proposed Second Amended Complaint for Damages and Other Relief [FRCP 15(a)(2)]” (“2/26/18 Motion for Leave”). [Dkt. no. 82.] The factual allegations of Plaintiffs' Proposed Second Amended Complaint for Damages attached to the 2/26/18 Motion for Leave (“Proposed Second Amended Complaint”), [dkt. no. 82-8, ] are described in the F&R and will not be repeated here. In the F&R, the magistrate judge denied the 2/26/18 Motion for Leave and recommended the action be dismissed with prejudice because: 1) the Proposed Second Amended Complaint did not comply with Fed.R.Civ.P. 8 in spite of warnings from both this Court and the magistrate judge; [F&R at 12-18;] 2) even without considering the statute of limitations issues, all of Plaintiffs' proposed claims were futile; [id. at 18-19;] and 3) dismissal of the action with prejudice was warranted because, based on Plaintiffs' repeated failures to state plausible claims through multiple iterations of their complaint and their failure to cure the defects identified in the 6/30/17 Order, Plaintiffs would be unable to save their complaint by filing any further amendments, [id. at 42-43].

         In the Objections, Plaintiffs first argue the Proposed Second Amended Complaint complies with Rule 8 because the length of the document is necessary due to the complexity of the case, the heightened pleading requirements for their fraud claim, and the requirements of the 6/30/17 Order. Plaintiffs also assert the Proposed Second Amended Complaint complies with the 6/30/17 Order. Plaintiffs argue generally that the magistrate judge was biased and ignored factual allegations in the Proposed Second Amended Complaint that show there are material facts in dispute in this case. Further, they assert all of the claims in the Proposed Second Amended Complaint are clearly and succinctly pled. As to their specific proposed claims, Plaintiffs state “[b]oth Magistrate and Plaintiffs focus on alleged Negligence claims, ” and the fraud claim is pled with sufficient particularity to satisfy Rule 9. [Objections at 7.] Finally, Plaintiffs contend that the magistrate judge abused his discretion by recommending that the case be dismissed with prejudice.

         In Plaintiffs' supplemental memorandum, Plaintiffs argue they should be permitted to file the Proposed Second Amended Complaint based on “new evidence.” [Suppl. to Objections at 1.] Plaintiffs attached twelve exhibits related to: the criminal investigation of Paul J. Sulla, Jr., Esq.; records from the County of Hawai`i Department of Finance, Real Property Tax Office, current as of 2018; mortgage documents and warranty deeds filed with the Assistant Registrar, Land Court, State of Hawai`i (“Land Court”) for the Property and a portion of Old Pahoa-Kalapana Road at Kamaili, Puna on the Island of Hawai`i (“Remnant A”); and materials related to civil proceedings filed in the Circuit Court of the Third Circuit, State of Hawai`i, and the Hawai`i Intermediate Court of Appeals. [Suppl. to Objections, Decl. of Leonard G. Horowitz (“Horowitz Suppl. Decl.”), Exhs. 1-12.] Plaintiffs assert these documents are “new discoveries in Public Records, ” and the recent “governmental actions pursuant to these discoveries” refute Defendants' arguments that Plaintiffs lost title through Mr. Sulla's nonjudicial foreclosure, or are not considered insureds under the January 23, 2004 title insurance policy on the Property issued by Stewart Title (“the Policy”). [Suppl. to Objections at 11.[3]

         STANDARD

         Although the instant Order refers to the document as the “F&R, ” it is actually both an order denying the 2/26/18 Motion for Leave and a recommendation to dismiss this action with prejudice. Thus, the portion of the F&R denying the 2/26/18 Motion for Leave must be reviewed under the standard applicable to appeals from a magistrate judge's order, and the portion of the F&R recommending that the case be dismissed with prejudice must be reviewed under the standard applicable to objections to a magistrate judge's findings and recommendation.

         I. Appeal of a Magistrate Judge's Order

          This district court has stated:

Pursuant to 28 U.S.C. § 636(b)(1)(A), Federal Rule of Civil Procedure 72(a), and LR 74.1, any party may appeal to the district court any pretrial nondispositive matter determined by a magistrate judge. Such an order may be reversed by the district court judge only when it is “clearly erroneous or contrary to law.” 28 U.S.C. § 636(b)(1)(A); LR 74.1. An order is “contrary to law” when it “fails to apply or misapplies relevant statutes, case law, or rules of procedure.” Akey v. Placer Cty., 2017 WL 1831944, at *10 (E.D. Cal. May 8, 2017) (citation and quotation marks omitted). And an order is “clearly erroneous” if, after review, the court has a “definite and firm conviction that a mistake has been committed.” Easley v. Cromartie, 532 U.S. 234, 242 (2001); Fisher v. Tucson Unified Sch. Dist., 652 F.3d 1131, 1136 (9th Cir. 2011); Cochran v. Aguirre, 2017 WL 2505230, at *1 (E.D. Cal. June 9, 2017) (citing cases). “[R]eview under the ‘clearly erroneous' standard is significantly deferential.” Concrete Pipe & Prods. v. Constr. Laborers Pension Tr., 508 U.S. 602, 623 (1993). Thus, the district court “may not simply substitute its judgment for that of the deciding court.” Grimes v. City & Cty. of S.F., 951 F.2d 236, 241 (9th Cir. 1991); Cochran, 2017 WL 2505230, at *1.
“‘Pretrial orders of a magistrate' judge ‘under § 636(b)(1)(A) . . . are not subject to a de novo determination.'” Hypolite v. Zamora, 2017 WL 68113, at *1 (E.D. Cal. Jan. 6, 2017) (quoting Merritt v. Int'l Bhd. of Boilermakers, 649 F.2d 1013, 1017 (5th Cir. 1981)). Consideration by the reviewing court of new evidence, therefore, is not permitted. United States ex rel. Liotine v. CDW Gov't, Inc., 2013 WL 1611427, at *1 (S.D. Ill. Apr. 15, 2013) (“If the district court allowed new evidence [on review of a magistrate judge's non-dispositive order], it would essentially be conducting an impermissible de novo review of the order.”); cf. United States v. Howell, 231 F.3d 615, 621 (9th Cir. 2000) (determining that “a district court has discretion, but is not required, to consider evidence presented for the first time” in a de novo review of a magistrate judge's dispositive recommendation).

McAllister v. Adecco USA Inc., Civ. No. 16-00447 JMS-KJM, 2017 WL 2818198, at *2 (D. Hawai`i June 29, 2017) (alterations in McAllister).

         II. Review of Findings and Recommendations

          This Court reviews a magistrate judge's findings and recommendations under the following standard:

When a party objects to a magistrate judge's findings or recommendations, the district court must review de novo those portions to which the objections are made and “may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge.” 28 U.S.C. § 636(b)(1); see also United States v. Raddatz, 447 U.S. 667, 673 (1980); United States v. Reyna-Tapia, 328 F.3d 1114, 1121 (9th Cir. 2003) (en banc) (“[T]he district judge must review the magistrate judge's findings and recommendations de novo if objection is made, but not otherwise.”).
Under a de novo standard, this Court reviews “the matter anew, the same as if it had not been heard before, and as if no decision previously had been rendered.” Freeman v. DirecTV, Inc., 457 F.3d 1001, 1004 (9th Cir. 2006); United States v. Silverman, 861 F.2d 571, 576 (9th Cir. 1988). The district court need not hold a de novo hearing; however, it is the court's obligation to arrive at its own independent conclusion about those portions of the magistrate judge's findings or recommendation to which a party objects. United States v. Remsing, 874 F.2d 614, 616 (9th Cir. 1989).

Muegge v. Aqua Hotels & Resorts, Inc., Civil 09-00614 LEK-BMK, 2015 WL 4041313, at *2 (D. Hawai`i June 30, 2015) (alteration in Muegge) (some ...


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