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Lynch v. Federal National Mortgage Association

United States District Court, D. Hawaii

April 29, 2019

DONNA LYNCH, Plaintiff,
v.
FEDERAL NATIONAL MORTGAGE ASSOCIATION, et al., Defendants.

          ORDER (1) GRANTING DEFENDANTS' MOTION TO DISMISS, (2) DENYING DEFENDANTS' MOTION TO STRIKE; AND (3) DISMISSING THE SECOND AMENDED COMPLAINT WITHOUT LEAVE TO AMEND

          DERRICK K. WATSON UNITED STATES DISTIRCT JUDGE.

         Plaintiff Donna Lynch, proceeding pro se, initiated this action more than three years ago in State court. Despite that age, little has occurred in this case during that significant period of time. As but one example, the pleadings have yet to be settled. That ends today. No. more extensions of time. No. more opportunities to amend the operative complaint. No. more excuses. Because Lynch, now on her Second Amended Complaint (SAC), has still failed to cure the deficiencies in her claims, as explained to her on previous occasions by this Court, claims that are, in any event, barred by res judicata, the SAC is DISMISSED. Moreover, because the SAC represents Lynch's third attempt to plead claims in this action, further leave to amend is DENIED.

         RELEVANT PROCEDURAL BACKGROUND

         Because the procedural background has been set forth, at length, in the Court's prior orders, Dkt. Nos. 40, 68, the Court picks up where it left off -- with its Order entered September 6, 2017 (“the September 6, 2017 Order”), Dkt. No. 68. Therein, the Court granted Defendants', Federal National Mortgage Association (“Fannie Mae”), Countrywide Home Loans, Inc. (“Countrywide”), and Bank of America, N.A. (“BOA, ” and with Fannie Mae and Countrywide, “Defendants”), motion to dismiss the First Amended Complaint (FAC) with limited leave to amend. Specifically, Lynch was allowed leave to amend her (1) claim of fraud concerning the 2010 foreclosure of the property located at 66 Haku Hale Place, Lahaina, Hawai‘i 96761 (“the Property”), (2) claim of fraud concerning a loan modification, and (3) claim for unfair and deceptive practices under Hawai‘i Revised Statutes Chapter 480 (“UDAP”). The Court dismissed with prejudice, and, thus, gave no leave to amend Lynch's (1) claim to quiet title, (2) claims under the Real Estate Settlement Procedures Act (RESPA), (3) claims under the Equal Credit Opportunity Act (ECOA), and (4) claim of fraud concerning the origination and recording of a loan/mortgage in 2007 (“the 2007 Mortgage”).

         In the September 6, 2017 Order, Lynch was expressly forewarned that she was being provided “one final attempt” to cure the deficiencies with her claims. Dkt. No. 68 at 30.

         On October 6, 2017, Lynch filed a Second Amended Complaint (SAC)-the operative pleading in this case. Dkt. No. 72. On November 3, 2017, Defendants moved to dismiss the SAC on various grounds, including the failure to state a claim and/or plead fraud with particularity (“the Motion to Dismiss”). Dkt. No. 76-1.[1] A hearing on the Motion to Dismiss was initially scheduled for January 5, 2018. Dkt. No. 78.

         The hearing, however, never took place because, since the filing of the Motion to Dismiss, this case has essentially been on a substantive, but not a procedural, pause. With a hearing scheduled for January 5, 2018, Lynch's response to the Motion to Dismiss was due on December 15, 2017. See Local Rule 7.4. On December 13, 2017, Lynch filed her first motion for extension of time to respond to the Motion to Dismiss, citing injuries and the potential that an attorney might represent her in this action. Dkt. No. 85. The Court granted the first motion for an extension, vacated the January 5, 2018 hearing, and gave Lynch until January 12, 2018 to file a response to the Motion to Dismiss. Dkt. No. 87.

         On January 12, 2018, Lynch filed a second motion for extension of time to respond to the Motion to Dismiss, citing, in identical fashion, the reasons from the first motion for extension. Dkt. No. 88. The Court granted in part the second motion for extension, allowing Lynch until February 9, 2018 to file a response to the Motion to Dismiss. Dkt. No. 89.

         On February 2, 2018, Lynch filed a third motion for extension of time to respond to the Motion to Dismiss, which, once again and in almost identical fashion, cited injuries and the potential for an attorney to appear on Lynch's behalf. Dkt. No. 90. On this occasion, the Court requested a response from Defendants, who objected to the extension Lynch sought. Dkt. Nos. 91-92. A hearing was then held on Lynch's motion for a third extension, at which the February 9, 2018 deadline to file a response to the Motion to Dismiss was held in abeyance and the parties were permitted to submit briefs on whether to conduct discovery with respect to Lynch's request for extending said deadline. Dkt. No. 95. After briefing was filed on the foregoing discovery matter, Dkt. Nos. 96-97, and a hearing held, Dkt. No. 102, the Court ordered limited discovery related to the medical reasons Lynch had provided for her requested extensions, Dkt. No. 101.[2]

         A status conference was then held on August 6, 2018. Dkt. No. 124. Defendants informed that discovery was continuing on Lynch's medical concerns and that a State appellate court had issued an order and judgment in a proceeding involving Defendants, Plaintiff, and the Property. Plaintiff, meanwhile, renewed her request for a settlement conference. The Court allowed the parties to contact the Magistrate Judge for purposes of scheduling a settlement conference and instructed Defendants to file a supplemental brief on the issue of res judicata. On September 6, 2018, Defendants filed a supplemental brief, arguing that all of Lynch's claims were barred on the ground of res judicata. Dkt. No. 131.[3]

         Not long after the August 6, 2018 status conference, Lynch sent an email to the Court requesting that a writ of eviction issued by a State court be set aside or, alternatively, stayed until resolution of this case. Dkt. No. 127. The Court declined to rule on the email because Lynch had failed to make her requests through an appropriate channel. Dkt. No. 128. The Court noted, however, that Lynch's requests were likely barred by at least two principles of federal law. Id.

         On September 27, 2018, a series of settlement and/or status conferences began before the Magistrate Judge. Dkt. No. 136. These conferences continued through November 1, 2018, Dkt. Nos. 139, 141-142, but, ultimately, did not end in settlement of this case, see Dkt. No. 142.

         On November 6, 2018, this Court held another status conference with the parties. Dkt. No. 143. The parties were instructed to reach agreement on any remaining disputes with respect to discovery on Plaintiff's medical concerns, and, if necessary, to file briefs addressing any unresolved disputes. Soon thereafter, the Court entered a Second Amended Rule 16 Scheduling Order in order to accommodate the delays in this case. See Dkt. No. 144. Notably, trial was moved from January 14, 2019 to September 9, 2019. Dkt. Nos. 84, 144.

         On February 7, 2019, the Court held yet another status conference with the parties. Dkt. No. 147. With discovery as to Lynch's medical concerns appearing as complete as it might become, the Court instructed Defendants to file a response in opposition to Plaintiff's third motion for an extension of time to respond to the Motion to Dismiss. Dkt. No. 147. Defendants did so soon thereafter. Dkt. No. 152. The Court then gave Lynch until March 19, 2019 to file a reply. Dkt. No. 153. A reply was not and has not been filed.

         On March 27, 2019, the Court addressed the motion for a third extension in a Minute Order. Dkt. No. 154. For the reasons discussed therein, the Court denied the third motion for an extension of time.[4] The Court further instructed Lynch to file an opposition to the Motion to Dismiss, the supplemental brief, and the two requests for judicial notice by April 10, 2019. Id. On April 10, 2019, Lynch did not file a reply to any of the foregoing filings. Instead, on that date, Lynch filed a March 11, 2019 letter drafted by a physician assistant at Maui Medical Group, Inc. that was not accompanied by any specific request or document. Dkt. No. 155. The letter states that Lynch's “health has deteriorated over the last 4 weeks” and she has been advised to travel to California for evaluation and treatment. The letter further states that Lynch “has an antibiotic resistant infection in her right hand which is restricting the functions of her right [hand]. She has a severe antibiotic resistant infection in her upper respiratory system. She has severe brain fog … [and] has abnormal blood counts.” The letter also appears to request a six-week extension of any filing deadlines following Lynch's treatment in California, the date of which is unknown.[5] Defendants have filed a motion to strike the letter or, alternatively, appoint a guardian ad litem on Lynch's behalf (“the Motion to Strike”). Dkt. No. 156.

         It is there that the procedural history of this case ends. Before going any further, in light of the most recent filings-i.e., the letter dated March 11, 2019 and the Motion to Strike-the Court believes it is necessary to address the same. As mentioned, the letter appears to request a six-week extension following the unknown completion of Lynch's treatment. Put simply, that will not be happening. As the March 27, 2019 Minute Order should have made clear to Plaintiff, the Court's willingness to grant any further extensions on the ground of medical concerns has been thoroughly exhausted in this case. The Court acknowledges, given the more proximate nature of the letter dated March 11, 2019, that the medical concerns raised therein may be of a more relevant ilk than the ones Plaintiff raised in her third motion for an extension of time. The Court's principal reason for giving these “new” medical concerns no additional credence, however, remains unchanged: as this Court has observed, listened, and read, Lynch's conduct before the undersigned-whether through conversation at numerous status conferences or through writings in numerous filings-and in the State proceeding between the same parties to this action, demonstrates that Plaintiff is more than capable of pursuing this case which she initiated. Never, whether in the filings Plaintiff has made or in the words Plaintiff has spoken to the undersigned, has this Court ever considered that Lynch was unable to pursue this case. While the Court was prepared to allow discovery to proceed in order to delve deeper into Plaintiff's medical concerns, that process has run its course, and, as explained in the March 27, 2019 Minute Order, in a fashion showing that Plaintiff is able to litigate her claims. Most striking in that regard are the numerous filings Lynch has recently made in the State proceeding between these same parties and involving the same Property. Some of those filings are mentioned in the March 27, 2019 Minute Order. See Dkt. No. 154 at 2. As Defendants assert in the Motion to Strike, Lynch has now filed even more, see Dkt. No. 156 at 4-5, all the while maintaining here that she was “not medically stable enough to prepare or file legal documents, ” see Dkt. No. 155. For the reasons discussed, an assertion such as that simply no longer passes muster with the Court. As a result, to the extent the letter dated March 11, 2019 can be construed as a fourth request to extend the time to respond to the Motion to Dismiss, it is denied.[6]

         As for Defendants' request to appoint a guardian ad litem for Plaintiff, the Court declines to do so. As just explained, the Court has found, based upon the record before it, including the personal observations the undersigned has made, that Plaintiff is able to litigate her claims in this case. As far as the Court is concerned, therefore, there is no need for a guardian to be appointed to do the same. The fact that, for more than 18 months, Plaintiff has not litigated the substance of her claims does not change this decision.

         Put in context, this means the following. Currently pending before the Court is the Motion to Dismiss. As with any movant, Defendants will be required to show that they are entitled to the relief they seek-dismissal of the SAC. The Court now turns to that determination.

         STANDARD OF REVIEW

         I. Rule 12(b)(6)

         Federal Rule of Civil Procedure 12(b)(6) authorizes the Court to dismiss a complaint that fails “to state a claim upon which relief can be granted.” Rule 12(b)(6) is read in conjunction with Rule 8(a), which requires “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). Pursuant to Ashcroft v. Iqbal, “[t]o survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). In addition, “the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions.” Id. Accordingly, “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. (citing Twombly, 550 U.S. at 555). Rather, “[a] claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556). Factual allegations that only permit the court to infer “the mere possibility of misconduct” do not show that the pleader is entitled to relief as required by Rule 8(a)(2). Id. at 679.

         A court may consider certain documents attached to a complaint, as well as documents incorporated by reference in the complaint or matters of judicial notice, without converting a Rule 12(b)(6) motion to dismiss into a motion for summary judgment. United States v. Ritchie, 342 F.3d 903, 908-09 (9th Cir. 2003). As in prior orders, the Court takes judicial notice of the pleadings, court orders, and other public records that have been submitted in this case. See Fed.R.Evid. 201(b); Lee v. City of Los Angeles, 250 F.3d 668, 688-89 (9th Cir. 2001).[7]

         II. Pro Se Status

         Because Lynch is proceeding pro se, the Court liberally construes her filings. Eldridge v. Block, 832 F.2d 1132, 1137 (9th Cir. 1987). With that in mind, “[u]nless it is absolutely clear that no amendment can cure the defect . . . a pro se litigant is entitled to notice of the complaint's deficiencies and an opportunity to amend prior to dismissal of the action.” Lucas v. Dep't of Corr., 66 F.3d 245, 248 (9th Cir. 1995).

         A court may, however, deny leave to amend due to undue delay or failure to cure deficiencies by amendments previously allowed or where further amendment would be futile. E.g., Gardner v. Martino, 563 F.3d 981, 990 (9th Cir. 2009); Leadsinger, Inc. v. BMG Music Publ'g, 512 F.3d 522, 532 (9th Cir. 2008).

         DISCUSSION

         In the Motion to Dismiss, Defendants argue, among other things, that the SAC should be dismissed for failure to state a claim, as well as for asserting claims and adding defendants for which leave to amend was not provided. In their supplemental brief, Defendants argue that all of the claims in the SAC are additionally barred by res judicata.

         I. Leave to Amend

         In its September 6, 2017 Order, the Court provided explicit and clear instructions to Lynch as to which claims had been dismissed without leave to amend and which had been dismissed with leave to amend. As explained earlier, Lynch was allowed leave to amend her (1) claim of fraud concerning the 2010 foreclosure of the Property, (2) claim of fraud concerning a loan modification, and (3) UDAP claim for unfair and deceptive practices. The Court dismissed with prejudice, and thus, gave no leave to amend Lynch's (1) claim to quiet title, (2) claims under RESPA, (3) claims under ECOA, and (4) claim of fraud concerning the origination and recording of the 2007 Mortgage.

         In other words, Lynch was allowed leave to amend three claims. In the SAC, Lynch asserts nine claims. In addition, the SAC names two entities as defendants, Mortgage Electronic Registration System (“MERS”) and Fannie Mae as Trustee for Securitized Trust Fannie Mae Guaranteed REMIC Pass-Through Certificates 2007-65 Trust (“the Trust”), that were never named as defendants in previous iterations of the complaint. The September 6, 2017 Order did not provide Lynch with leave to assert nine claims or to name two new defendants. The only matters for which Lynch was provided leave to amend was to cure the deficiencies identified with the three claims identified above. See Dkt. No. 68 at 29-30.

         Whether the SAC has cured those deficiencies will be addressed below.[8]As for the remaining claims, though, one reason why the SAC must be dismissed, at least in part, is because Lynch did not have leave to add new claims or defendants. This fact would not change irrespective of whether Lynch had filed a response to the Motion to Dismiss. As a result, on this ground, all claims against MERS and the Trust are subject to dismissal without leave to amend. As for Defendants, the Court addresses each claim in the SAC in turn.

         In the first cause of action, Lynch asserts a claim of “Lack of Standing/Wrongful Disclosure[.]” To the extent this claim is not premised upon fraud, it constitutes a claim for which Lynch was not provided leave to amend. Therefore, except as to fraud, which will be discussed below, the first claim is subject to dismissal without leave to amend.

         In the second cause of action, Lynch asserts a claim of fraudulent concealment. Although it is difficult to determine the nature of the fraud with respect to this claim, it appears to involve fraud in the origination of the 2007 Mortgage. As the Court explained in the September 6, 2017 Order, though, any such claims related to the 2007 Mortgage are time-barred, and, as such, leave to amend was not ...


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