Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_14-cv-05437/USCOURTS-cand-3_14-cv-05437-9/pdf.json

Nature of Suit Code: 290
Nature of Suit: Other Real Property Actions
Cause of Action: 28:1332 Diversity-(Citizenship)

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

RICHARD REED, et al.,

Plaintiffs,

v.

US BAN N.A., et al.,

Defendants.

Case No. 14-cv-05437-VC 

ORDER GRANTING DEFENDANTS' 

MOTION TO DISMISS

Re: Dkt. No. 37

The motion to dismiss is granted.

The plaintiffs' first amended complaint fails to state a claim because the complaint names 

three distinct entities as defendants but fails to differentiate between these multiple defendants. 

See In re Sagent Tech., Inc., Derivative Litig., 278 F. Supp. 2d 1079, 1094 (N.D. Cal. 2003)

("[T]he complaint fails to state a claim because plaintiffs do not indicate which individual 

defendant or defendants were responsible for which alleged wrongful act."). Moreover, to the 

extent that the plaintiffs' claims rest on a theory of successor liability, the complaint fails to 

adequately plead facts necessary to support this theory. See Butler v. Adoption Media, LLC, 486 

F. Supp. 2d 1022, 1066 (N.D. Cal. 2007). Because the complaint must be dismissed on these 

grounds alone, the Court does not reach the additional arguments that defendants raise in their 

motion to dismiss.

Accordingly, the motion to dismiss is granted. But because it does not appear that 

amendment would be futile, the dismissal is with leave to amend. Should the plaintiffs wish to file

an amended complaint, they must do so within 21 days of the date of this order or the dismissal 

will be with prejudice.1

 

1

The Court also notes that the plaintiffs still have yet to serve Chase, and have not offered any 

reason for this failure. If the plaintiffs file an amended complaint that includes claims against 

Chase, they should promptly serve Chase. Failure to do so will result in dismissal of those claims.

See Bolden v. City of Topeka, Kan., 441 F.3d 1129, 1148 (10th Cir. 2006) ("[T]he 120–day period 

provided by Rule 4(m) is not restarted by the filing of an amended complaint except as to those 

defendants newly added in the amended complaint.").

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United States District Court

Northern District of California

In addition, in their reply in support of their motion to dismiss, the defendants raised for 

the first time the possibility that a number of the claims in the plaintiffs' operative complaint are 

barred by the judgment in Chase's favor in the plaintiffs' prior state court action. (The defendants

only learned of this action after filing their motion to dismiss.) Although the Court ordered the 

plaintiffs to file a sur-reply on the issue of the preclusive effect of this prior judgment, the parties 

have not yet had the opportunity to fully brief this issue. Without the benefit of full briefing from 

both parties, the Court does not reach this issue. However, the Court notes that, contrary to the 

plaintiffs' representation in their sur-reply on the issue of res judicata/collateral estoppel, under 

California law the Superior Court's judgment in the defendants' favor serves as a final judgment on 

the merits. See Janson v. Deutsche Bank Nat'l Trust Co., No. 14-CV-05639 JSC, 2015 WL 

1250092, at *10 (N.D. Cal. Mar. 18, 2015). Furthermore, the plaintiffs contended in their surreply that an intervening change in the law means that they are not now precluded from reasserting 

claims based on Chase's conduct. But the plaintiffs cited only federal case law in support of this 

proposition, and the preclusive effect of the prior state court judgment is governed by California 

law. See City of Martinez v. Texaco Trading & Transp., Inc., 353 F.3d 758, 762 (9th Cir. 2003). 

And the California Supreme Court has held that res judicata applies even if the law changes 

between the first and second lawsuit. See, e.g., Slater v. Blackwood, 543 P.2d 593, 595 (Cal. 

1975).

2

 

 

2 As the court explained:

It cannot be denied that judicial or legislative action which results in the 

overturning of established legal principles often leads to seemingly arbitrary and 

unwarranted distinctions in the treatment accorded similarly situated parties. 

However, [p]ublic policy and the interests of litigants alike require that there be 

an end to litigation. The result urged by plaintiff . . . would call . . . into question 

the finality of any judgment and thus is bound to cause infinitely more injustice in 

the long run than it can conceivably avert in this case. The consistent application 

of the traditional principle that final judgments, even erroneous ones, are a bar to 

further proceedings based on the same cause of action is necessary to the wellordered functioning of the judicial process. It should not be impaired for the 

benefit of particular plaintiffs, regardless of the sympathy their plight might 

arouse in an individual case.

Slater, 543 P.2d at 596 (citations and internal quotation marks omitted). And at any rate, the 

change in the law on which the plaintiffs rely, the enactment of the California Homeowner Bill of 

Rights ("HBOR"), could have no bearing on the plaintiffs' ability to reassert claims based on

Chase's conduct before the HBOR took effect because the HBOR is not retroactive. See Gonzales 

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United States District Court

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Accordingly, if the plaintiffs choose to file an amended complaint, and if the amended 

complaint asserts claims that were brought or could have been brought in the prior lawsuit, 

counsel for the plaintiffs must have a good-faith basis for believing that those claims are not 

barred under the doctrines of res judicata and/or collateral estoppel. See Fed. R. Civ. P. 11(b).

IT IS SO ORDERED.

Dated: May 8, 2015

______________________________________

 VINCE CHHABRIA

 United States District Judge

 

v. Wells Fargo Bank, N.A., No. C 14-03850 JSW, 2014 WL 5465290, at *2 (N.D. Cal. Oct. 28, 

2014).

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