Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_09-cv-03071/USCOURTS-caed-2_09-cv-03071-1/pdf.json

Nature of Suit Code: 140
Nature of Suit: Negotiable Instruments
Cause of Action: 15:1601 Truth in Lending

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28 This matter is deemed to be suitable for decision without oral *

argument. E.D. Cal. R. 230(g).

1

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF CALIFORNIA

KIAMARS AZIZKHAN, )

)

Plaintiff, ) 2:09-cv-03071-GEB-EFB

)

v. ) ORDER DISMISSING PLAINTIFF’S

) FEDERAL CLAIMS AND DECLINING

FIRST FRANKLIN LOAN SERVICING; ) SUPPLEMENTAL JURISDICTION

FIRST FRANKLIN FINANCIAL ) OVER STATE LAW CLAIMS AND

CORPORATION; CAL-WESTERN ) DENYING DEFENDANTS’ MOTION

RECONVEYANCE CORPORATION; BANK OF ) FOR RULE 11 SANCTIONS*

AMERICA, NATIONAL ASSOCIATION AS )

SUCCESSOR BY MERGER TO LASALLE BANK)

NATIONAL ASSOCIATION, AS TRUSTEE )

FOR FIRST FRANKLIN MORTGAGE LOAN )

TRUST, MORTGAGE LOAN ASSET BACKED )

CERTIFICATES, SERIES 2007-FF2; )

MORTGAGE ELECTRONIC REGISTRATION )

SYSTEM, INC.; ANCHOR FINANCIAL )

MORTGAGE COMPANY, INC.; RYAN N. )

SMITH; and DOES 1-20 inclusive, )

)

Defendants. )

)

Defendants Home Loan Services, Inc d/b/a First Franklin Loan

Servicing, First Franklin Financial Corporation, Bank of America,

National Association, and Mortgage Electronic Registration Systems,

Inc. (“Defendants”) move to dismiss Plaintiff’s first amended

complaint under Federal Rule of Civil Procedure 12(b)(6). (Docket No.

14.) Defendants also filed a motion for sanctions under Federal Rule

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of Civil Procedure 11(c), seeking an award of $11,405 in attorneys’

fees. (Docket No. 16.) Plaintiff opposes Defendants’ motion for

sanctions and filed a Statement of Non-Opposition to Defendants’

dismissal motion. (Docket Nos. 28, 30.)

I. Dismissal of Plaintiff’s Federal Claims

Plaintiff’s Statement of Non-Opposition states that he “does

not oppose” Defendants’ dismissal motion “insofar as it relates to

[his] Eighth Cause of Action under the Real Estate Settlement

Procedures Act, 12 U.S.C. §2605 (“RESPA”) and [his] Ninth Cause of

Action under the Truth in Lending Act, 15 U.S.C. §1604 (“TILA”) . . .

.” (Statement of Non-Opposition 2:2-10.) Further, “Plaintiff . . .

requests that all claims against all Defendants . . . be dismissed,

without prejudice, or in the alternative, that Plaintiff be granted

leave to amend his First Amended Complaint in this matter so as to

remove the Causes of Action under TILA and RESPA which had previously

been plead [sic] by the Plaintiff . . . .” (Id. 2:11-14.) Plaintiff

also argues that “[w]hen the federal claims that served as the basis

for the Court’s original jurisdiction are eliminated, either through

dismissal . . . or by [amendment],” the court should “decline to

assert supplemental jurisdiction over the remaining state law causes

of action, and dismiss them without prejudice . . . .” (Id. 2:24-

3:3.) 

In accordance with Plaintiff’s Statement of Non-Opposition,

Plaintiff’s TILA and RESPA claims are dismissed.

II. Defendants’ Rule 11 Motion

Defendants argue they are entitled to an award of attorneys’

fees because Plaintiff’s counsel failed to comply with Rule 11(b)’s

requirements. Specifically, Defendants contend Plaintiff’s first

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amended complaint was “filed for purposes of delay [and] to avoid the

hearing of Defendants’ Motion to Dismiss the original complaint.” 

(Mot. for Sanctions 5:8-10.) Defendants further argue that

Plaintiff’s first amended complaint “does not differ significantly

from the original [c]omplaint” and does not “state a claim upon which

relief can be granted . . . .” (Id. 5:9-12.) Plaintiff counters that

“[w]hile Plaintiff’s counsel admits that her pleadings in this matter

have been, at times, somewhat ‘inartfully’ pled, these instances are

certainly not tantamount to the bad faith and wilful disobedience to

the Court’s Orders as contemplated under the subject Rules and

applicable authorities, so as to justify the imposition of the most

extreme sanction in the form of attorneys fees payable to an opposing

party.” (Opp’n to Mot. for Sanctions 3:2-7.) 

“Rule 11 authorizes a court to impose a sanction on any

attorney, law firm, or party that brings a claim for an improper

purpose or without support in law or evidence.” Sneller v. City of

Bainbridge Island, --- F.3d ----, 2010 WL 2076805, at *2 (9th Cir. May

25, 2010). Specifically, Rule 11(b) provides in pertinent part:

By presenting to the court a pleading . . . –-

whether by signing, filing, submitting, or later

advocating it–-an attorney . . . certifies that to

the best of the person’s knowledge, information,

and belief, formed after inquiry reasonable under

the circumstances:

(1) it is not being presented for any improper

purpose, such as to harass, cause unnecessary

delay, or needlessly increase the cost of

litigation;

(2) the claims . . . and other legal

contentions are warranted by existing law or

by nonfrivolous argument for extending,

modifying, or reversing existing law or for

establishing new law; 

(3) the factual contentions have evidentiary

support or, if specifically so identified,

will likely have evidentiary support afer a

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reasonable opportunity for further

investigation or discovery . . . .

Fed. R. Civ. P. 11(b). As explained by the Ninth Circuit, under Rule

11:

[a]n attorney has a duty prior to filing a complaint

not only to conduct a reasonable factual

investigation, but also to perform adequate legal

research that confirms whether the theoretical

underpinnings of the complaint are warranted by

existing law or a good faith argument for an

extension, modification or reversal of existing law.

One of the fundamental purposes of Rule 11 is to

reduce frivolous claims, defenses or motions and to

deter costly meritless maneuvers, thereby avoiding

delay and unnecessary expense in litigation.

Christian v. Mattel, Inc., 286 F.3d 1118, 1127 (9th Cir. 2002)

(quotation and citations omitted). 

Defendants argue Plaintiff’s first amended complaint

violates Rule 11(b) since:

It [was] evident[ly] filed for purposes of delay,

to avoid the hearing of Defendants’ Motion to

Dismiss the original complaint. The First Amended

Complaint does not differ significantly from the

original [c]omplaint. It also fails to state a

claim upon which relief can be granted against

Defendants, for reasons set forth below. In

general, none of these Defendants made the alleged

misrepresentations which are subject of Plaintiff’s

complaint and each of Plaintiff’s claims for relief

is insufficient as a matter of law.

(Mot. for Sanctions 5:7-14.) Defendants then address each of

Plaintiff’s claims and assert, often without explanation or citation

to any authority, that they fail to state a claim. (Id. 5-8.)

Defendants unsupported and conclusory arguments, however,

are insufficient to demonstrate that Rule 11 sanctions should be

awarded. Defendants’ motion does not identify the subsection or

subsections of Rule 11(b) that Defendants contend Plaintiff’s first

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amended complaint violates; nor have Defendants supported their

arguments and explained how the first amended complaint runs afoul of

Rule 11(b). See Verigy US, Inc. v. Mayder, No. C-07-04330 RMW, 2008

WL 4820755, at *9 (N.D. Cal. Nov. 4, 2008) (stating that “[i]n

assessing whether the filing of a particular paper was frivolous under

Rule 11, the court should not consider the ultimate failure on the

merits . . . but rather whether the position was legally unreasonable

or without factual foundation”) (quotations and citation omitted).

Further, Defendants cited no authority in their motion suggesting Rule

11 sanctions are warranted when a complaint merely fails to state a

claim. Defendants raise additional arguments in their reply brief in

support of their position, but these arguments are disregarded since

Defendants have not shown that these new arguments should be

considered. See United States v. Romm, 455 F.3d 990, 997 (9th Cir.

2006) (stating that “arguments not raised by a party in its opening

brief are deemed waived”) (quoting Smith v. March, 194 F.3d 1045, 1052

(9th Cir. 1999); Ass’n of Irritated Residents v. C & R Vanderham

Dairy, 435 F. Supp. 2d 1078, 1089 (E.D. Cal. 2006) (stating that “[i]t

is inappropriate to consider arguments raised for the first time in a

reply brief.”) Since Defendants have not demonstrated that

Plaintiff’s first amended complaint violates Rule 11(b), their motion

is denied.

III. 28 U.S.C.§ 1367(c)(3) Dismissal of Plaintiff’s State Law Claims

Further, since no federal claims remain, the court may

decide whether to continue exercising supplemental jurisdiction over

Plaintiff’s state law claims. See Acri v. Varian Assocs., Inc., 114

F.3d 999, 1001 n.3 (9th Cir. 1997) (en banc). Under 28 U.S.C. §

1367(c)(3), a district court “may decline to exercise supplemental

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jurisdiction over a [state law] claim” when “all claims over which it

has original jurisdiction” have been dismissed. This decision should

be informed by the values of economy, convenience, fairness and comity

as delineated by the Supreme Court in United Mine Workers of Am. v.

Gibbs, 383 U.S. 715, 726 (1996). Acri v. Varian Associates, Inc., 114

F.3d 999, 1001 (9th Cir. 1997) (en banc). 

Comity weighs in favor of declining supplemental

jurisdiction since state courts have the primary responsibility for

developing and applying state law. See Acri, 114 F.3d at 1001

(stating that “in the usual case in which all federal-law claims are

eliminated before trial, the balance of factors will point towards

declining to exercise jurisdiction over the remaining state-law

claims”) (quotations and citation omitted); Gini v. Las Vegas Metro.

Police Dep’t, 40 F.3d 1041, 1046 (9th Cir. 1994) (stating that “[i]n

the usual case in which federal-law claims are eliminated before

trial, the balance of factors will point toward declining to exercise

jurisdiction over the remaining state law claims”) (quoting Schneider

v. TRW, Inc., 938 F.2d 986, 993 (9th Cir. 1991)). Further, none of

the other Gibbs factors favor retaining supplemental jurisdiction over

Plaintiff’s state law claims. Therefore, the court declines to

exercise supplemental jurisdiction over Plaintiff’s state law claims

and those claims are dismissed without prejudice under 28 U.S.C. §

1367(c)(3). This action shall be closed.

Dated: June 3, 2010

 

GARLAND E. BURRELL, JR.

United States District Judge

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