Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_09-cv-03429/USCOURTS-caed-2_09-cv-03429-1/pdf.json

Nature of Suit Code: 220
Nature of Suit: Foreclosure
Cause of Action: 15:1601 Truth in Lending

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IN THE UNITED STATES DISTRICT COURT 

FOR THE EASTERN DISTRICT OF CALIFORNIA 

JOSE MANUEL SOTO and ALICIA 

SOTO, 

 Plaintiffs, 

v. 

BANK OF AMERICA, fka 

COUNTRYWIDE HOME LOANS, INC.; 

COUNTRYWIDE HOME LOANS, INC.; 

MORTGAGE ELECTRONIC 

REGISTRATION SYSTEMS, INC.; 

COUNTRYWIDE FULL SPECTRUM 

LENDING; PETER SCHWARTZ and 

DOES 1-20 inclusive, 

 Defendants. 

______________________________/

 

Case No. 09-cv-03429-JAM-KJM 

ORDER DENYING DEFENDANTS’ 

MOTION FOR RULE 11 SANCTIONS

This matter comes before the Court on Defendants 

Countrywide Home Loans, Inc. (for itself and erroneously sued 

herein as Countrywide Full Spectrum Lending), BAC Home Loans 

(erroneously sued herein as Bank of America Home Loans f/k/a 

Countrywide home Loans), and Mortgage Electronic Registration 

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System, Inc., (collectively “Defendants”) Motion for Attorney’s 

Fees and Costs, pursuant to Federal Rule of Civil Procedure 

11(c). Defendants seek Rule 11 sanctions regarding Plaintiffs’ 

Jose and Alicia Soto’s (“Plaintiffs’”) Complaint. 1 

I. BACKGROUND

Plaintiffs’ Complaint arose from a loan transaction for the 

residential property located at 9686 Early Light Way, Elk Grove, 

California. The Complaint alleged a cause of action for 

violation of the Real Estate Settlement Procedures Act 

(“RESPA”), 12 U.S.C. §2605 et seq., and seven state law claims 

for violation of the California Rosenthal Act, violation of the 

Business and Professions Code, negligence, fraud, breach of 

contract, breach of fiduciary duty, and breach of the implied 

covenant of good faith and fair dealing. 

In addition to the Motion for Rule 11 sanctions, Defendants 

also brought a motion to dismiss the complaint and a motion to 

strike. Plaintiffs did not respond to any of the motions with an 

opposition or statement of non-opposition as required by Local 

Rule 230(c). 

In light of Plaintiffs’ failure to respond to the motion to 

dismiss, the motion to strike, or the motion for Rule 11 

 

1

 This motion was determined to be suitable for decision without 

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

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sanctions, the Court issued an Order to Show. The Order to Show 

Cause required Plaintiffs to show cause why the Court should not 

dismiss the Complaint and issue Rule 11 sanctions against 

Plaintiffs attorney. Plaintiffs had previously filed two 

substantially identical complaints in federal court before Judge 

Burrell, voluntarily dismissed their action under threat of a 

Rule 11 sanction motion by Defendants, and then filed the 

present Complaint in state court. The Complaint, which is 

substantially identical to the previous complaints, was removed 

from state court by Defendants on the basis of federal question 

jurisdiction, as it contains a federal claim. 

 II. OPINION

A. Motion to Dismiss 

Shortly before the Court was preparing to issue its order 

regarding the motion to dismiss and the motion for Rule 11 

sanctions, Plaintiffs filed a Notice of Voluntary Dismissal 

pursuant to Federal Rule of Civil Procedure 41(a)(1)(i). 

Plaintiffs voluntarily dismissed, without prejudice, all of 

their claims against all the defendants in the case. The notice 

stated that Plaintiffs have not dismissed an action based on or 

including the same claims as those presented in this suit. 

However, as Defendants pointed out in their objections to the 

notice, Plaintiffs have dismissed a previous action that was 

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based on and included nearly all of the same claims as those 

presented in this suit. The previous action was 2:09-cv-01546 

before Judge Burrell. In that case, Plaintiffs brought claims 

against Defendants for violations of the Truth in Lending Act, 

the Real Estate Settlement Procedure Act, the California 

Rosenthal Act, violation of the California Business and 

Professions Code, negligence, fraud, breach of contract, breach 

of fiduciary duty, breach of the implied covenant of good faith 

and fair dealing, and California Civil Code §1632. Thus, after 

voluntarily dismissing the previous complaint before Judge 

Burrell, Plaintiffs merely took out their Truth in Lending Act 

claim and their California Civil Code §1632 claim, and then refiled the present Complaint. 

“If a plaintiff invokes Rule 41(a)(1) a second time for an 

action based on or including the same claim, the action must be 

dismissed with prejudice.” Cooter & Gell v. Hartmarx

Corporation, 110 S.Ct. 2447, 2455 (1990). Accordingly, 

Plaintiffs’ Complaint is dismissed with prejudice. In light of 

the notice of voluntary dismissal, Defendants motion to dismiss 

and motion to strike are moot. 

B. Rule 11 Sanctions 

The day before their response to the Order to Show Cause 

was due, Plaintiffs filed an ex parte motion for more time to 

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respond. Plaintiffs then filed an untimely response to the Order 

to Show Cause, as the Court had not yet had the opportunity to 

rule on the ex parte motion. Nonetheless, the Court will 

consider the response. 

Despite Plaintiffs voluntary dismissal of the case, the 

Court still has jurisdiction to decide the motion for Rule 11 

sanctions. Cooter, 110 S.Ct. at 2455. Based on the arguments set 

forth in Plaintiffs’ response to the order to show cause, the 

Court will not issue Rule 11 sanctions against Plaintiffs’ 

attorney Michael J.M. Brooks. The Court does not condone Mr. 

Brooks’ conduct in this matter, and notes the time and expense 

that his repeated filings of substantially identical complaints 

has caused the Defendants and the Federal Court. However, the 

Court concludes that his actions before this Court do not rise 

to a level permitting this Court to issue sanctions on its own 

initiative pursuant to Rule 11(c)(3). 

Additionally, the Court cannot grant Defendants’ motion for 

Rule 11 sanctions, as Defendants failed to comply with the ‘safe 

harbor’ procedures set forth in Rule 11(c)(2). They complied 

with the procedures in the previous case before Judge Burrell, 

but failed to do so in the case before this Court. Thus, 

Defendants motion for Rule 11 sanctions is denied. 

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III. ORDER 

 For the reasons set forth above, Plaintiffs’ voluntary 

dismissal of the case is WITH PREJUDICE. Defendants’ Motion for 

Attorney’s Fees and Costs pursuant to Rule 11 is DENIED. 

IT IS SO ORDERED. 

Dated: April 28, 2010 

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