Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_09-cv-00879/USCOURTS-casd-3_09-cv-00879-2/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 15:1601 Truth in Lending

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

CARLA M. NEJO,

Plaintiff,

CASE NO. 09cv879 BEN (JMA)

ORDER DISMISSING FEDERAL

TRUTH IN LENDING ACT

CLAIM WITH PREJUDICE

[Dkt. No. 88]

vs.

WILSHIRE CREDIT CORPORATION, et

al.,

Defendants.

AND ALL RELATED CROSS-CLAIMS

_______________________________________

I. INTRODUCTION

The motion to dismiss jointly filed by defendants Wilshire Credit Corporation and Steel

Mountain Capital I, LLC is now before the Court. Previously, the Court dismissed without

prejudice Plaintiff’s federal Truth in Lending Act claim and declined to exercise jurisdiction over

the remaining state law claims pursuant to 28 U.S.C. §1337. Plaintiff was given leave to file an

amended complaint. She declined. 

II. MOTION TO DISMISS

Under Federal Rule of Civil Procedure 41(b), an action may be dismissed with prejudice if

the plaintiff fails to prosecute or fails to comply with a court order. Plaintiff’s action has already

been dismissed without prejudice. Defendants now move for a dismissal with prejudice. They

argue that Plaintiff’s decision to not file an amended complaint, when leave was granted, is a

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failure to comply with a court order. The failure to comply, in turn, justifies a Rule 41(b)

dismissal with prejudice. Plaintiff objects noting that the order granting leave was permissive. 

She was not ordered to file an amended complaint. In fact, the order conditioned the filing of any

amended complaint on the inclusion of an allegation setting forth her ability to tender the entire

loan amount and subject to the requirements of Rule 11(b) of the Federal Rules of Civil Procedure. 

Defendants are correct that under Ninth Circuit precedent when a plaintiff fails to amend

her complaint – after a dismissal with leave to amend – the dismissal is typically considered to be

a failure to comply with a court order. Yourish v. California Amplifier, 191 F.3d 983, 986 (9th Cir.

1999). The circumstances in this case are not typical. As mentioned earlier, leave was given to

amend, but amendment was not expected. Unlike the typical case, leave to amend was

conditioned on the unique requirement that Plaintiff be able to carefully allege her ability to tender

the entire amount of mortgage loan proceeds. Consequently, a Rule 41(b) dismissal would be

unsupported. Plaintiff neither disobeyed a court order nor failed to prosecute her case.

 On the other hand, Plaintiff does not oppose a dismissal with prejudice of her federal Truth

in Lending Act claim for relief. She would like a final appealable order. This case is more

analogous to the circumstance in Omstead v. Dell, Inc., 594 F.3d 1081 (9th Cir. 2010). In

Omstead, the plaintiffs wanted to appeal an interlocutory ruling, stalling the case. The trial court

abused its discretion when it dismissed under Rule 41(b) for failure to prosecute. Id. at 1084. The

court of appeals then pragmatically construed the erroneous Rule 41(b) dismissal as a permissible

Rule 41(a)(2) voluntary dismissal with prejudice by the plaintiffs. Id. at 1085. 

In this case, a Rule 41(b) dismissal would be unwarranted. However, the motion and

Plaintiff’s concession will be construed, instead, as a request by Plaintiff for a voluntary dismissal

with prejudice under Rule 41(a)(2) of her federal Truth in Lending Act claim. That request is

granted. See Omstead, 594 F.3d at 1085.

Finally, Steel Mountain Capital I, LLC requests an expungement order. The request is

raised for the first time in its reply brief. It seeks an order expunging its own Notice of

Termination of Deed of Trust Pursuant to TILA which it filed in the records of the county

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recorder. It argues that the expungement order is necessary to return the parties to the status quo

ante. Plaintiff objects because the issue is raised for the first time in a reply brief. Plaintiff also

objects because the remedy is not available under Rule 41.

The court declines to order the requested expungement. Steel Mountain Capital I has

offered no authority for its request. Rule 41 of the Federal Rules of Civil Procedure does not list

expungement as a remedy. Moreover, there are no reported cases addressing the issue. 

Therefore, the court declines to consider this issue of first impression raised for the first time in a

reply brief and it declines to order expungement.

III. CONCLUSION

Defendants’ motion to dismiss under Rule 41(b) is construed as a motion by Plaintiff under

Rule 41(a)(2) to dismiss her Truth in Lending Act claim with prejudice. That motion is granted. 

Plaintiff’s federal Truth in Lending Act claim for relief is dismissed with prejudice. Steel

Mountain Capital I’s request to expunge is denied. 

IT IS SO ORDERED.

DATED: September 20, 2010

Hon. Roger T. Benitez

United States District Judge

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