Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_10-cv-00436/USCOURTS-azd-2_10-cv-00436-1/pdf.json

Nature of Suit Code: 480
Nature of Suit: Consumer Credit
Cause of Action: 15:1692 Fair Debt Collection Act

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1

 Plaintiff sued HomEq Servicing Corporation, but Defendants contend that Plaintiff

intended to sue Barclays Capital Real Estate Inc., which does business under the HomEq

name. See Dkt. #27 at 1. For purposes of this Order, the Court will refer to this Defendant

as HomEq.

2

 The requests for oral argument are denied. The parties have fully briefed the issues

and oral argument will not aid the Court’s decision. See Lake at Las Vegas Investors Group,

WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Theodore E. Coit, Jr., 

Plaintiff, 

vs.

Sutton Funding LLC, et al.,

Defendants. 

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No. CV-10-0436-PHX-DGC

ORDER

On March 24, 2010, Defendants Sutton Funding LLC and HomEq Servicing

Corporation1

 filed a motion to quash lis pendens. Dkt. #7. On March 31, 2010, Defendants

filed a motion to dismiss Plaintiff Theodore E. Coit, Jr.’s complaint with prejudice. Dkt. #8.

On April 26, 2010, Plaintiff filed an amended complaint (Dkt. #25) and on May 3, 2010,

Plaintiff filed a response to the motion to quash and the motion to dismiss (Dkt. #27).

Plaintiff has also filed a motion for production, inspection and copying. Dkt. #22. For

reasons that follow, the Court will strike Plaintiff’s amended complaint (Dkt. #25), grant the

motion to quash (Dkt. #7), grant the motion to dismiss (Dkt. #8), and deny the motion for

production, inspection and copying (Dkt. #22) as moot.2

Case 2:10-cv-00436-DGC Document 31 Filed 05/24/10 Page 1 of 6
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28 Inc. v. Pac. Malibu Dev. Corp., 933 F.2d 724, 729 (9th Cir. 1991).

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I. Background.

In June of 2007, Don A. Poulsen executed a Deed of Trust on the property at 11028

N. Buffalo Drive, Fountain Hills, AZ 85268. Dkt. #9-1 at 1. In October of 2007, Plaintiff

received the property from Poulsen through a Grant Deed. Dkt. #9-2 at 1-2. On July 15,

2008, the property was sold at a public auction to Defendant Sutton. Dkt. #9-3 at 1-2.

 On July 14, 2008, Plaintiff filed an action in Maricopa County Superior Court

against Sutton and HomEq over the sale and foreclosure of the property. See Coit v. Sutton

Funding LLC, CV2008-016643. On March 25, 2009, Plaintiff filed an action in this Court

against Sutton and HomEq for claims arising out of the sale of the same property (“the 2009

action”), which ended in dismissal with prejudice. See Coit v. Sutton Funding LLC, No. 09-

CV-0597-NVW, Dkt. #1. On February 26, 2010, Plaintiff filed the present action against

Sutton and HomEq, alleging violations of the Fair Debt Collection Practices Act (“FDCPA”)

and seeking damages of $773,000. Dkt. #1. Plaintiff recorded a lis pendens on the property

in the Maricopa County Recorder’s Office on March 1, 2010. Dkt. #7-7 at 2-3. The lis

pendens is the ninth Plaintiff has filed on this property. See Dkt. #7 at 8 (listing eight other

lis pendens filings). 

II. The Amended Complaint.

Under Rule 15(a)(1), a party may amend his pleading once as a matter of course

within 21 days after serving it or within 21 days after service of a responsive pleading or a

motion under Rule 12(b), (e), or (f), whichever is earlier. Fed. R. Civ. P. 15(a)(1)(A)-(B).

In all other cases, a party may amend his pleading only with the opposing party’s written

consent or leave of court. Fed. R. Civ. P. 15(a)(2).

In this case, Defendants Sutton and HomEq – the only Defendants named in the

original complaint – filed a motion to dismiss pursuant to Rule 12(b) on March 31, 2010.

Dkt. #8. This means that Plaintiff had 21 days from March 31, 2010 to amend his pleading

as a matter of right. Fed. R. Civ. P. 15(a)(1)(A)-(B). Plaintiff filed his amended complaint

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on April 26, 2010 – 26 days after Defendants filed the motion to dismiss. Dkt. #25. Plaintiff

did not receive Defendants’ consent or leave of court before filing the amended complaint.

As a result, Plaintiff’s amended complaint was not timely. Fed. R. Civ. P. 15(a)(2). 

Although courts liberally grant leave to amend pursuant to Rule 15, the policy in favor

of amendments is subject to limitations. The United States Supreme Court has established

that motions to amend should not be granted if there has been (1) undue delay, (2) bad faith

or dilatory motives on the part of the movant, (3) repeated failure to cure deficiencies by

previous amendments, (4) undue prejudice to the opposing party, or (5) futility of the

proposed amendment. Foman v. Davis, 371 U.S. 178, 182 (1962). Several of these factors

weigh against granting Plaintiff leave to amend. This is Plaintiff’s third lawsuit based on the

sale and foreclosure of the property. Plaintiff has recorded nine separate lis pendens on the

property. Dkt. #7 at 3. Defendants have been required to defend themselves in three separate

actions and against three different complaints, all arising from the same operative facts.

Currently, the property is set to be purchased by a buyer, “but the closing has been delayed”

and is still being delayed “because of Plaintiff’s recorded lis pendens.” Dkt. #7 at 2. Any

further delay is prejudicial to Defendants as it may cause the potential buyer to walk away.

Moreover, it seems likely that Plaintiff’s claims have been brought to cause delay. The Court

concludes that leave to amend should be denied because of undue delay, dilatory motives,

and undue prejudice to Defendants. Because Plaintiff’s amended complaint was untimely

and leave to amend will not be granted, the operative complaint in this case is the original

complaint against Sutton and HomEq for violation of the FDCPA.

III. Motion to Dismiss.

Defendants have filed a motion to dismiss on the ground that Plaintiff’s claims are

barred by the doctrine of res judicata. “Res judicata is applicable whenever there is (1) an

identity of claims, (2) a final judgment on the merits, and (3) a privity between parties.”

Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency, 322 F.3d 1064,

1077 (9th Cir. 2003) (internal quotation and citation omitted). Defendants argue that all three

requirements are met here.

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An identity of claims exists when two suits arise from the same transactional nucleus

of facts. Id. “Newly articulated claims based on the same nucleus of facts may still be

subject to a res judicata finding if the claims could have been brought in the earlier action.”

Id. at 1078. “It is immaterial whether the claims asserted subsequent to the judgment were

actually pursued in the action that led to the judgment; rather, the relevant inquiry is whether

they could have been brought.” Id. (quoting U.S. ex rel. Barajas v. Northrop Corp., 147 F.3d

905, 909 (9th Cir. 1998)). This case arises out of the same nucleus of facts as the 2009 action

– “facts surrounding foreclosure of the property[.]” Dkt. #8 at 3-4. As a result, Plaintiff’s

claim for violation of the FDCPA could have been brought in the 2009 action. 

As to the second element, the Ninth Circuit has held that “a dismissal with prejudice

has a res judicata effect” because it is “on the merits.” In re Marino, 181 F.3d 1142, 1144

(9th Cir. 1999) (internal quotations and citations omitted). Defendants argue that the 2009

action has res judicata effect because it was dismissed with prejudice on June 15, 2009. Coit,

No. 09-CV-0597-NVW, Dkt. #14. The Court agrees and finds this element satisfied.

The third element of privity exists when “several parties in both actions are

identical[.]” Tahoe-Sierra, 322 F.3d at 1081. The parties in this case – Sutton, HomEq, and

Plaintiff – are identical to the parties in the 2009 action. 

Plaintiff argues that res judicata does not apply because he “never was allowed to have

his day in court to completely adjudicate the merits of Plaintiff’s claim for relief.” Dkt. #27

at 3. He also argues that res judicata is inappropriate because “[t]here are parties in this

action that were not involved in the previous action.” Id. at 4. 

As to his first argument, Plaintiff was given his day in court in the 2009 action and yet

failed to respond to the motion to dismiss in a timely fashion. If Plaintiff lacked his day in

court, it was only because he chose not to litigate his case. As to Plaintiff’s second argument,

there are no parties in this action that were not involved in the 2009 action. The only two

parties named in the complaint are Sutton and HomEq, both of which were named in the

2009 action. See CV09-00597-PHX-NVW, Dkt. #1. Plaintiff sought to add two additional

parties in his amended complaint, but these proposed Defendants are not part of the pending

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3

 Moreover, the two parties that Plaintiff sought to add are (1) Barclays, which,

according to Defendants, is HomEq’s proper name, and (2) Equifirst Corporation, which

Plaintiff believes is the owner of Sutton. Dkt. #25 at 1-2. Thus, even if these entities were

in the case, there likely would be an identity of parties.

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action as the amended complaint is not operative.3

 Because Plaintiff’s claims are barred by

res judicata, the Court will dismiss this action.

IV. Dismissal with Prejudice.

Defendants ask the Court to dismiss this action with prejudice. “Dismissal with

prejudice and without leave to amend is not appropriate unless it is clear . . . that the

complaint could not be saved by amendment.” Eminence Capital, LLC v. Aspeon, Inc., 316

F.3d 1048, 1052 (9th Cir. 2003). In making a determination whether to dismiss with

prejudice, the Court should consider the following factors: “undue delay, bad faith or dilatory

motive on the part of the movant, repeated failure to cure deficiencies by amendments

previously allowed, undue prejudice to the opposing party by virtue of allowance of the

amendment, futility of the amendment, etc.” Id. These factors are essentially the same as

those considered above for denying leave to amend. For reasons explained above, the Court

concludes that several of these factors are present, including undue delay, dilatory motives,

and undue prejudice to Defendants. The Court accordingly finds that dismissal with

prejudice is appropriate. 

Moreover, Plaintiff’s claims are barred by res judicata. That doctrine would apply to

any claims Plaintiff might assert against Defendants arising out of the 2008 sales transaction.

Defects in the complaint could not be cured by amendment.

IV. Motion to Quash.

 Defendants argue that the Court should quash the lis pendens on the property which

Plaintiff filed in this case. See Dkt. #5. Under Arizona law, a notice of lis pendens may be

recorded “[i]n an action affecting title to real property[.] A.R.S. § 12-1191. Because the

Court is dismissing the pending action with prejudice, it will also quash the lis pendens.

Defendants also ask the Court to impose “statutory sanctions” against Plaintiff

pursuant to A.R.S. § 33-420(A), which states that “[a] person purporting to claim an interest

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in, or a lien or encumbrance against, real property, who causes a document asserting such

claim to be recorded in the office of the county recorder, knowing or having reason to know

that the document is forged, groundless, contains a material misstatement or false claim or

is otherwise invalid is liable to the owner or beneficial title holder of the real property for the

sum of not less than five thousand dollars[.]” Defendants have not filed a counterclaim

against Plaintiff pursuant to A.R.S. § 33-420(A), and the statute does not provide for

sanctions. As a result, the Court will deny the request for “statutory sanctions.”

V. Motion for Production, Inspection and Copying.

Because the Court will dismiss this action with prejudice, the Court will deny

Plaintiff’s motion for production, inspection and copying. Dkt. #22. 

IT IS ORDERED:

1. Defendants’ motion to quash lis pendens (Dkt. #7) is granted.

2. Defendants’ motion to dismiss with prejudice (Dkt. #8) is granted.

3. Plaintiff’s motion for production, inspection, and copying (Dkt. #22) is

denied.

4. Plaintiff’s amended complaint (Dkt. #25) is stricken.

5. The Clerk of Court shall terminate this action.

DATED this 21st day of May, 2010.

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