Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_12-cv-03091/USCOURTS-caed-2_12-cv-03091-2/pdf.json

Nature of Suit Code: 220
Nature of Suit: Foreclosure
Cause of Action: 28:1332 Diversity-(Citizenship)

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UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF CALIFORNIA

LARA GOGGIA,

Plaintiff,

NO. CIV. S-12-3091 LKK/KJN 

v.

FEDERAL NATIONAL MORTGAGE

ASSOCIATION aka FANNIE MAE O R D E R

and DOES 1 through 50,

inclusive,

Defendants.

 /

Plaintiff Lara Goggia sues defendant Federal National Mortgage

Association aka Fannie Mae, alleging wrongful foreclosure on her

home loan. On October 19, 2012, plaintiff commenced an action in

Placer County Superior Court. On December 26, 2012, defendant

removed the action to federal court on the basis of diversity

jurisdiction. (ECF No. 1.) On January 23, 2013, plaintiff filed her

First Amended Complaint (“FAC”, ECF No. 9.) Defendant moves to

dismiss the FAC under Fed. R. Civ. P. 12(b)(6) and to strike

references to punitive damages in the FAC under Fed. R. Civ.

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P. 12(f).1

The motions came on for hearing on March 25, 2013. Having

considered the matter, for the reasons set forth below, the court

will stay this matter pending the outcome of a duplicative action

in the California Court of Appeals.

I. BACKGROUND

On October 2, 2007, a Deed of Trust issued, securing a

$327,000 loan to plaintiff against her home, located at 408 L

Street in Lincoln, California. (FAC ¶ 1, Ex. 1.) The Deed of Trust

names MortgageIt, Inc. as the lender, Advantage Title, Inc. as the

trustee, and Mortgage Electronic Registration Systems, Inc.

(“MERS”) as the beneficiary. (Id.) 

On September 16, 2009, a Notice of Default and Election to

Sell under Deed of Trust was recorded against the subject property.

(FAC ¶ 19, Ex. 2.) The Notice lists Cal-Western Reconveyance

Corporation as the trustee. (Id.) Plaintiff alleges that the Notice

names Citimortgage, Inc. as the beneficiary (FAC ¶ 19), but the

copy of the Notice attached to the FAC does not appear to support

this allegation. Rather, it identifies MERS as the beneficiary

under the Deed of Trust, and identifies Citimortgage only as the

party to contact “[t]o find out the amount you must pay, or to

arrange for payment to stop the foreclosure, or if your property

is in foreclosure for any other reason[.]” Accordingly, the court

will disregard plaintiff’s allegation that Citimortgage was the

1

 Hereinafter, the term “Rule” refers to the applicable

Federal Rule of Civil Procedure.

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beneficiary, and instead treat MERS as the beneficiary at the time

the Notice of Default issued.

On March 1, 2010, a Substitution of Trustee was recorded,

substituting Cal-Western Reconveyance Corporation for Advantage

Title, Inc. as trustee under the Deed of Trust. (FAC ¶ 20, Ex. 3.)

The signature on this instrument is dated September 4, 2009, and

was notarially acknowledged on February 24, 2010. (Id.) Plaintiff

alleges that this Substitution of Trustee is void because it was

fraudulently back-dated, pointing to a small notice on the bottom

of the document which reads “Rev. 02/06/10”; plaintiff takes this

notice to mean that the document in question was prepared on

February 6, 2010, after the document was purportedly signed. (FAC

¶ 23.) The court will accept plaintiff’s allegation as true for the

purposes of the instant motion to dismiss and motion to strike.

Nevertheless, one point bears mention: the fact that the date of

a notary’s acknowledgment of a signature follows the date of that

signature does not indicate fraud. In repeatedly raising this

allegation, plaintiff demonstrates his failure to understand the

difference between a notarial jurat and a notarial acknowledgment.

A notarial jurat indicates that a document was signed in the

notary’s presence. Under California law, the jurat evidences “the

fact that an affidavit was properly made before a duly authorized

officer[, such as a notary.] Unlike acknowledgments . . . jurats

are generally not competent to prove the identity of the affiant.”

Allstate Savings & Loan Assoc. v. Lotito, 116 Cal. App. 3d 998,

1005 (1981). 

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By contrast, an acknowledgment is “the act of a person who has

executed an instrument declaring before a competent court or

officer that the execution is his or her act or deed.” Jeffrey A.

Schafer, 1 Cal. Jur. 3d Acknowledgments § 1 (2013). “The

acknowledgment of an instrument is merely evidentiary in character.

Its object is to entitle the instrument to be recorded and to

permit its introduction into evidence.” Id. at § 2. “Under

California law, a notarial acknowledgment certifies only the

identity of the signer.” U.S. v. Jaramillo, 69 F.3d 388, 392 (9th

Cir. 1995) (citing Cal. Civ. Code. § 1185(a)) (emphasis in

original). The form of a certificate of acknowledgment is

prescribed by Cal. Civ. Code. § 1189(a)(1).

Accordingly, the court will disregard plaintiffs’ allegations

that acknowledgments which conform to the requirements of Cal. Civ.

Code. § 1189(a)(1) are fraudulent solely because they are dated

after the accompanying signatures.

On March 1, 2010, an Assignment of Deed of Trust was recorded

which assigned MERS’s beneficial interest in the Deed of Trust to

Citimortgage, Inc. (“Assignment to Citimortgage”). (FAC ¶ 24, Ex.

4.) The signature on this instrument is dated September 7, 2009,

and was notarially acknowledged on February 24, 2010. (Id.)

Plaintiff alleges that this instrument is void because it was

fraudulently back-dated. In support of this allegation, plaintiff

points out a small notice on the bottom of the document which reads

“Rev. 02/06/10"; plaintiff takes this notice to mean that the

document in question was prepared on February 6, 2010, after the

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document was purportedly signed. (FAC ¶ 23.)

On July 29, 2010, an Assignment of Deed of Trust was recorded

which assigned Citimortgage, Inc.’s beneficial interest in the Deed

of Trust to defendant Fannie Mae (“Assignment to Fannie Mae”). (FAC

¶ 31, Ex. 5.) The signature on this instrument is dated July 4,

2010, and was notarially acknowledged on July 21, 2010. (Id.)

Plaintiff alleges on information and belief that the instrument is

void because the relevant office would have been closed for the

July 4 holiday. (FAC ¶ 33.)

Plaintiff also alleges that the Assignment to Fannie Mae, as

well as the following documents, are void because the Substitution

of Trustee and the Assignment to Citimortgage were void (FAC ¶ 32):

Trustee’s Deed upon Sale, recorded July 29, 2010 (FAC ¶ 34, Ex. 6);

Rescission of Trustee’s Deed upon Sale, recorded March 24, 2011

(FAC ¶ 36, Ex. 7); Assignment of Deed of Trust, recorded March 24,

2011 (FAC ¶ 37, Ex. 8); Trustee’s Deed Upon Sale, recorded April

6, 2012 (FAC ¶ 38, Ex. 9); and Grant Deed, recorded May 1, 2012

(FAC ¶ 40, Ex. 10). 

The FAC asserts causes of action (i) to void the various

instruments which led to the foreclosure sale of her home, (ii) for

slander of title, and (iii) for violations of Cal. Bus. & Prof.

Code § 17200.

II. STANDARD ON MOTION TO DISMISS UNDER RULE 12(b)(6) 

A dismissal motion under Rule 12(b)(6) challenges a

complaint’s compliance with federal pleading requirements. Under

Rule 8(a)(2), a pleading must contain a “short and plain statement

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of the claim showing that the pleader is entitled to relief.” The

complaint must give the defendant “‘fair notice of what the ...

claim is and the grounds upon which it rests.’” Bell Atlantic v.

Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355

U.S. 41, 47 (1957)).

To meet this requirement, the complaint must be supported by

factual allegations. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

Moreover, this court “must accept as true all of the factual

allegations contained in the complaint.” Erickson v. Pardus, 551

U.S. 89, 94 (2007).2

“While legal conclusions can provide the framework of a

complaint,” neither legal conclusions nor conclusory statements are

themselves sufficient, and such statements are not entitled to a

presumption of truth. Iqbal, 556 U.S. at 678. Iqbal and Twombly

therefore prescribe a two-step process for evaluation of motions

to dismiss. The court first identifies the non-conclusory factual

allegations, and then determines whether these allegations, taken

as true and construed in the light most favorable to the plaintiff,

“plausibly give rise to an entitlement to relief.” Iqbal, 556 U.S.

at 664.

“Plausibility,” as it is used in Twombly and Iqbal, does not

2

 Citing Twombly, 556 U.S. at 555-56, Neitzke v. Williams, 490

U.S. 319, 327 (1989) (“[w]hat Rule 12(b)(6) does not countenance

are dismissals based on a judge’s disbelief of a complaint’s

factual allegations”), and Scheuer v. Rhodes, 416 U.S. 232, 236

(1974) (“it may appear on the face of the pleadings that a recovery

is very remote and unlikely but that is not the test” under

Rule 12(b)(6)).

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refer to the likelihood that a pleader will succeed in proving the

allegations. Instead, it refers to whether the non-conclusory

factual allegations, when assumed to be true, “allow[] the court

to draw the reasonable inference that the defendant is liable for

the misconduct alleged.” Iqbal, 556 U.S. at 663. “The plausibility

standard is not akin to a ‘probability requirement,’ but it asks

for more than a sheer possibility that a defendant has acted

unlawfully.” Id. (quoting Twombly, 550 U.S. at 557).3 A complaint

may fail to show a right to relief either by lacking a cognizable

legal theory or by lacking sufficient facts alleged under a

cognizable legal theory. Balistreri v. Pacifica Police Dep’t, 901

F.2d 696, 699 (9th Cir. 1990).

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3 Twombly imposed an apparently-new “plausibility” gloss on

the previously well-known Rule 8(a) standard, and retired the

long-established “no set of facts” standard of Conley v. Gibson,

355 U.S. 41 (1957), although it did not overrule that case

outright. See Moss v. U.S. Secret Service, 572 F.3d 962, 968 (9th

Cir. 2009) (the Twombly Court “cautioned that it was not outright

overruling Conley ...,” although it was retiring the “no set of

facts” language from Conley). The Ninth Circuit has acknowledged

the difficulty of applying the resulting standard, given the

“perplexing” mix of standards the Supreme Court has applied in

recent cases. See Starr v. Baca, 652 F.3d 1202, 1215 (9th

Cir. 2011) (comparing the Court’s application of the “original,

more lenient version of Rule 8(a)” in Swierkiewicz v. Sorema N.A.,

534 U.S. 506 (2002) and Erickson v. Pardus, 551 U.S. 89 (2007) (per

curiam), with the seemingly “higher pleading standard” in Dura

Pharmaceuticals, Inc. v. Broudo, 544 U.S. 336 (2005), Twombly and

Iqbal), rehearing en banc denied, 659 F.3d 850 (October 5, 2011).

See also Cook v. Brewer, 637 F.3d 1002, 1004 (9th Cir. 2011)

(applying the “no set of facts” standard to a Section 1983 case).

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III. ANALYSIS

A. Request for Judicial Notice

Defendant requests that judicial notice be taken of two

documents recorded in the Placer County Recorder’s Office:

(1) Notice of Trustee’s Sale, recorded on March 18, 2010 (Request

for Judicial Notice (“RJN”) Ex. A, ECF No. 12-1), and (2) Notice

of Trustee’s Sale, recorded on January 11, 2012 (RJN Ex. B). 

Defendant also requests that judicial notice be taken of the

following documents filed in Goggia v. MortgageIt, Corp., et al.,

Placer County Superior Court case no. SCV0030873 (the “State Court

Action”): (1) complaint (RJN Ex. C); (2) demurrer to complaint (RJN

Ex. D); (3) first amended complaint (RJN Ex. E); (4) demurrer to

first amended complaint (RJN Ex. F); (5) judgment (RJN Ex. G); and

(6) order on demurrer (RJN Ex. H).

“As a general rule, a district court may not consider any

material beyond the pleadings in ruling on a Rule 12(b)(6) motion.”

Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir. 2001)

(internal quotations and citation omitted). However, a court may

consider matters properly subject to judicial notice. Swartz v.

KPMG LLP, 476 F.3d 756, 763 (9th Cir. 2007). A matter may be

judicially noticed if it is either “generally known within the

territorial jurisdiction of the trial court” or “capable of

accurate and ready determination by resort to sources whose

accuracy cannot reasonably be questioned.” Fed. R. Evid. 201(b).

Courts may “take judicial notice of court filings and other matters

of public record[, as they] are readily verifiable and, therefore,

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the proper subject of judicial notice.” Reyn’s Pasta Bella, LLC v.

Visa USA, Inc., 442 F.3d 741, 746 n. 6 (9th Cir. 2006) (internal

citation omitted).

Accordingly, the court will take judicial notice of these

eight documents.

B. Are plaintiff’s claims precluded by the doctrine of res

judicata?

Defendant argues that plaintiff’s claims are precluded by the

doctrine of res judicata. (Mot. Dismiss 4-5.)

On April 2, 2012, plaintiff initiated the State Court Action,

alleging unlawful conduct by MortgageIt, Inc., MERS, Citimortgage,

and Cal-Western Reconveyance in the financing of her home loan, and

the subsequent foreclosure on that loan. (RJN Ex. C.) On June 25,

2012, plaintiff filed a First Amended Complaint that, inter alia,

dropped MERS as a defendant. (RJN Ex. E.) On September 24, 2012,

the Superior Court sustained Citimortgage’s demurrer to plaintiff’s

complaint, and dismissed the action with prejudice with respect to

Citimortgage.4 (RJN Ex. H.) Plaintiff appealed. (FAC ¶ 43.)

Defendant argues that, although it was not named as a

defendant in the State Court Action, plaintiff’s “attempt to

relitigate the same issues and claims based on the same allegedly

wrongful foreclosure that could have and should have been brought

in the Placer lawsuit is barred by the doctrine of res judicata.”

(Defendant’s Points & Authorities in Support of Motion to Dismiss

4

 It is unclear from the record presented whether the action

as a whole was dismissed.

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(“Mot. Dismiss”) 5:18-20, ECF No. 12.)

“Judicial actions must achieve a basic minimum quality to

become eligible for res judicata effects . . . . The traditional

words used to describe this quality require that there be a

judgment that is valid, final, and on the merits.” 18A Charles Alan

Wright & Arthur Miller, Federal Practice and Procedure § 4427 (2d

ed. 2012). Federal courts apply state law to determine the

preclusive effects of state court judgements. Marrese v. American

Acad. of Ortho. Surgeons, 470 U.S. 373, 380 (1985) (citing 28

U.S.C. § 1738). Under California law, a judgment is not final for

purposes of res judicata during the pendency of and until the

resolution of an appeal. Agarwal v. Johnson, 25 Cal. 3d 932, 954

n.11 (1979), overruled on other grounds by White v. Ultramar, Inc.,

21 Cal. 4th 563 (1999). See also Cal. Code. Civ. Proc. § 1049 (“An

action is deemed to be pending from the time of its commencement

until its final determination upon appeal, or until the time for

appeal has passed, unless the judgment is sooner satisfied”).

Plaintiff alleges, and the parties confirmed at hearing, that

the judgment in the State Court Action is currently on appeal to

the California Court of Appeals, Third Appellate District. (FAC

¶ 43.) As it is on appeal, and therefore not final, this judgment

cannot be res judicata of the instant proceeding.

C. Is this action barred as duplicative of the state court

action?

Although not subject to res judicata, this proceeding is

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arguably subject to the doctrine against duplicative actions.5

“[T]he true test of the sufficiency of a plea of ‘other suit

pending’ in another forum [is] the legal efficacy of the first

suit, when finally disposed of, as ‘the thing adjudged,’ regarding

the matters at issue in the second suit.” The Haytian Republic, 154

U.S. 118, 124 (1894). As summarized by the Ninth Circuit, “[I]n

assessing whether the second action is duplicative of the first,

we examine whether the causes of action and relief sought, as well

as the parties or privies to the action, are the same.” Adams v.

Cal. Dept. of Health Services, 487 F.3d 684, 689 (9th Cir. 2007).

1. Are the causes of action and relief sought the same?

The Ninth Circuit has prescribed the following test to

determine whether the causes of action and relief sought in two

lawsuits are the same:

Whether two events are part of the same transaction or

series depends on whether they are related to the same

set of facts and whether they could conveniently be

tried together. In applying the transaction test, we

examine four criteria: (1) whether rights or interests

established in the prior judgment would be destroyed or

impaired by prosecution of the second action;

5

 That said, the rule against claim splitting is generally

considered to be an aspect of res judicata. See, e.g., Stone v.

Dep’t of Aviation, 453 F.3d 1271, 1278 (10th Cir. 2006) (“A

plaintiff’s obligation to bring all related claims together in the

same action arises under the common law rule of claim preclusion

prohibiting the splitting of actions”); Haphey v. Linn Cnty., 924

F.2d 1512, 1517 (9th Cir. 1991) (“[T]he doctrines against splitting

a cause of action and claim preclusion do not appear to be

distinct, but rather two sides of the same coin.”). However, as

there has been no final judgment in the state court, the full faith

and credit statute, 28 U.S.C. § 1738, appears not to apply.

Accordingly, the court will apply federal law, rather than state

law, to determine whether this action is duplicative of the State

Court Action.

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(2) whether substantially the same evidence is presented

in the two actions; (3) whether the two suits involve

infringement of the same right; and (4) whether the two

suits arise out of the same transactional nucleus of

facts. The last of these criteria is the most important.

Id. (internal quotations omitted).

To apply this test, we must first determine the relief sought

in the two actions. Though the operative complaint therein is

somewhat difficult to decipher, the State Court Action appears to

seek: (1) to void the foreclosure and sale of plaintiff’s home on

the grounds that the securitization of the home loan was unlawful;

(2) to rescind plaintiff’s home loan on the grounds that there was

mistake in the formation of the financing contract; (3) to obtain

a loan modification on promissory estoppel grounds; and (4) to

quiet title to the property and place title in plaintiff’s name.

(RJN Ex. E.)

The instant action seeks to void the foreclosure and sale of

plaintiff’s home on the grounds that some or all of the

foreclosure-related instruments were fraudulent. In both actions,

plaintiff seeks damages for the harms she has suffered.

The first factor, “whether rights or interests established in

the prior judgment would be destroyed or impaired by prosecution

of the second action,” is a bit inapt, since, as discussed above,

there is no final judgment in the State Court Action. Nevertheless,

the test would be satisfied if the State Court Action judgment were

upheld on appeal (thereby quieting title in Fannie Mae), but in the

present action, the court found the foreclosure proceedings to be

fraudulent, and ordered some or all of the underlying transactions

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unwound.

The second factor, “whether substantially the same evidence

is presented in the two actions,” is satisfied. The State Court

Action complaint includes as exhibits the Deed of Trust, and two

allegedly-fraudulent Assignments of Deed of Trust; all three of

these documents are included as exhibits to the instant complaint.

The third factor, “whether the two suits involve infringement

of the same right,” is also satisfied. The right to have lawful

procedures observed in a home foreclosure proceeding in implicated

in both cases.

The fourth and most important factor, “whether the two suits

arise out of the same transactional nucleus of facts,” is also

satisfied. The claims asserted in each case arise from allegedlyfraudulent instruments; these instruments assign interests created

by the Deed of Trust securing plaintiff’s original home loan. 

The relief sought in this case is essentially a subset of the

relief sought in the State Court Action. While the State Court

Action asserts additional causes of action stemming from the

financing, securitization, and failed modification of the home

loan, both cases allege unlawful conduct in the foreclosure and

sale of the home. 

Accordingly, it appears that, under the test prescribed by the

Ninth Circuit in Adams, 487 F.3d at 689, the causes of action and

the relief sought in the two cases are the same.

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2. Are the parties to the actions, or their privies, the

same?

The State Court Action names MortgageIt, Inc., Citimortgage,

and Cal-Western Reconveyance as defendants. The instant action is

directed at Fannie Mae. The question, then, is whether Fannie Mae

is in privity with any of the State Court Action defendants.

Adams, 487 F.3d at 691, embraced a broad conception of privity

under the doctrine of virtual representation: “The necessary

elements of virtual representation are an identity of interests and

adequate representation. Additional features of a virtual

representation relationship include a close relationship,

substantial participation, and tactical maneuvering.” Id. (internal

citations and quotations omitted). The Supreme Court has since

rejected the use of “virtual representation” as a basis for finding

privity in the preclusion context. Taylor v. Sturgell, 553 U.S.

880, 904 (2008) (holding that there is no “virtual representation”

exception to the general rule against nonparty claim preclusion).

In its place, Taylor identifies six well-established exceptions to

the traditional rule against preclusion of a nonparty:

1. If the nonparty “agrees to be bound by the determination

of issues in an action between others.” Id. at 893.

2. If there are pre-existing “substantive legal

relationships” between the nonparty and the party to the

other action, including “preceding and succeeding owners

of property . . . and assignee and assignor.” Id. at

894.

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3. If the nonparty is adequately represented in the other

action by a party with the same interests, such as in a

class action or a suit by a trustee or other fiduciary.

Id. at 894-5.

4. If the nonparty assumes control over the other

litigation. Id. at 895.

5. If the nonparty is acting as a proxy for a party in the

other case, which is attempting to relitigate matters

through the proxy. Id.

6. If a special statutory scheme, such as bankruptcy,

“expressly foreclos[es] successive litigation by

[nonparties] . . . .” Id.

Fannie Mae appears to fall into the second category.

“Successive property relationships provide some of the oldest and

best established rules for extending preclusion to nonparties . . .

Ordinarily a judgment is binding on a nonparty who took by transfer

from a party after judgment or while suit was pending.” 18A Charles

Alan Wright & Arthur R. Miller, Federal Practice & Procedure § 4462

(2d ed. 2012) (“Successive Property Relationships”). The State

Court Action was filed on April 2, 2012. (RJN Ex. C.) Fannie Mae

took possession of the disputed property under a Grant Deed dated

April 4, 2012 and recorded May 1, 2012. (FAC Ex. 10.) Fannie Mae

is also named as an assignee in several other instruments recorded

against the property. While the present action alleges that many

of these instruments are fraudulent, these allegations simply

reinforce the need to avoid an inconsistent determination of their

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authenticity in the State Court Action.

Fannie Mae appears to be in privity with Citimortgage, a

defendant in the State Court Action. Accordingly, under the test

outlined in Adams, 487 F.3d at 684, the court finds that the

present case is duplicative of the State Court Action.

3. What remedy should the court prescribe?

If a district court determines that a later-filed action is

duplicative of an earlier action, it “may exercise its discretion

to dismiss [the] later-filed action, to stay that action pending

resolution of the previously filed action, to enjoin the parties

from proceeding with it, or to consolidate both actions.” Id. After

discussing the matter with the parties at hearing, the court has

determined that the appropriate course of action is to stay this

matter pending the final outcome of the State Court Action.

IV. CONCLUSION

For the reasons set forth above, the court orders as follows:

[1] This action is STAYED pending a final resolution of

Goggia v. MortgageIt, Corp., et al., Placer County Superior

Court case no. SCV0030873. Having stayed the action, the

court will not at this time address the remaining issues

raised in defendant’s motion to dismiss and motion to strike.

[2] The parties are DIRECTED to notify the court within ten

(10) days of the conclusion of the state court proceedings.

[3] The clerk’s office is to ADMINISTRATIVELY CLOSE this

action at this time.

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IT IS SO ORDERED.

DATED: March 26, 2013.

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