Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_18-cv-01999/USCOURTS-casd-3_18-cv-01999-3/pdf.json

Nature of Suit Code: 360
Nature of Suit: Other Personal Injury
Cause of Action: 11:0362(h) Bankruptcy: Violation of Automatic Stay

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

AKI T. OYA and SOUCHI OYA,

Plaintiffs,

v.

WELLS FARGO BANK, N.A, et al.,

Defendants.

Case No.: 3:18-cv-01999-H-BGS

ORDER:

(1) GRANTING DEFENDANTS’ 

MOTION TO DISMISS

(2) DENYING AS MOOT 

DEFENDANTS’ MOTION TO 

STRIKE

On May 21, 2019, Defendants Select Portfolio Servicing, Inc. (“Select”) and Wells 

Fargo Bank N.A., as trustee for Structured Asset Mortgage Investments II Trust 2007-AR4, 

Mortgage Pass-Through Certificates, Series 2007-AR4, (“Wells Fargo”) (collectively, 

“Defendants”) filed a motion to dismiss Plaintiff Aki T. Oya’s and Plaintiff Souchi Oya’s 

(collectively, “Plaintiffs”) third amended complaint and a motion to strike portions of the 

complaint. (Doc. Nos. 45, 46.) On June 21, 2019, Plaintiffs filed their responses. (Doc. 

Nos. 50, 51.) On June 27, 2019, Defendants filed their replies. (Doc. No. 35.) On June 

28, 2019, Plaintiffs filed an objection to the replies. (Doc. No. 55.) For the reasons below, 

the Court grants Defendants’ motion to dismiss and denies as moot Defendants’ motion to 

strike. 

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Background

The following facts are taken from the allegations in Plaintiffs’ third amended 

complaint and attached exhibits. (Doc. No. 43.) Plaintiffs allege that Defendants 

wrongfully foreclosed on their home and then subjected Plaintiffs to unlawful collections 

and credit reporting. (Id. ¶ 1.) Before the foreclosure, Plaintiffs purchased their residence 

in Encinitas, California on November 2, 2001. (Id. ¶ 27.) On January 31, 2007, Plaintiffs 

encumbered their residence with a non-recourse loan and first deed of trust. (Id. ¶ 28.) 

Plaintiffs allege that, between January 31, 2007 and May 28, 2013, the loan went into 

default with over $90,000 in arrearages. (See id. ¶¶ 17, 23.) The loan and deed of trust 

were transferred to Wells Fargo, and Select was assigned its servicing, on or about May 

28, 2013. (Id. ¶¶ 16, 17, 29.) Plaintiffs attach a loan modification agreement that went 

into effect September 1, 2013. (Id. at 53–56.) The loan agreement establishes a new 

principal balance of $691,404.77. (Id.)

After defaulting, Plaintiffs filed bankruptcy petitions on six separate occasions. (See

id. at 85.) Plaintiffs filed these bankruptcy petitions after the September 1, 2013 loan 

modification agreement went into effect. (See Bankruptcy Petition Nos. 16-05492-CL13,

17-06297-MM13, 17-00783-CL13, 17-03553-MM13, 18-02170-CL13, 18-03598-CL13; 

Doc. Nos. 43 at 85; 45-3 at 76–112.

1

) With respect to the first petition, the case was filed 

on September 6, 2016 and the case was dismissed and all automatic stays were vacated

January 20, 2017. (See Bankruptcy Petition No. 16-05492-CL13; Doc. No. 45-3 at 80.) 

The second case was filed on October 18, 2017 and dismissed on November 7, 2017. (See

Bankruptcy Petition No. 17-06297-MM13; Doc. No. 43 at 85.) The third case was filed 

on February 15, 2017 and was dismissed on March 6, 2017 for failure to file required 

schedules, statements, a Chapter 13 plan, certificate of credit counseling, and a statement 

of current monthly income. (See Bankruptcy Petition No. 17-00783-CL13; Doc. No. 45-3

 

1 The Court takes judicial notice of the bankruptcy court dockets filed by Defendants as their 

authenticity is not subject to reasonable dispute. (Doc. No. 45-3 at 76–112.) See Fed. R. Evid. 

201(b)(2).

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at 86.) The fourth case was filed on June 17, 2017 and dismissed on June 26, 2017. (See

Bankruptcy Petition No. 17-03553-MM13; Doc. No. 43 at 85.) The fifth case was filed on 

April 12, 2018 and was dismissed on May 2, 2018 for failure to file schedules, statements, 

and a Chapter 13 plan. (See Bankruptcy Petition No. 18-02170-CL13; Doc. No. 45-3 at 

92.) 

With respect to their most recent petition, Plaintiff Aki T. Oya filed for bankruptcy 

protection on June 15, 2018, three days before the scheduled foreclosure date. (Doc. No. 

43 ¶¶ 30–31.) Throughout the process of filing this petition, Plaintiffs did not provide 

documentation required by the bankruptcy court. (See id. at 85.) The bankruptcy court 

dismissed the case because Plaintiff Aki T. Oya did not file schedules, a statement of 

financial affairs, or a plan. (See id.)

Defendants held the foreclosure sale on June 18, 2018 and sold the property for 

$915,300. (Id. ¶¶ 41, 43.) Plaintiffs allege that the sale dispossessed them of over $450,000 

in equity. (Id. ¶ 84.) According to Plaintiffs, Defendants had notice of Plaintiffs’ 

bankruptcy case. (Id. ¶ 38.) Plaintiff further allege that, on June 19, 2018, Defendants 

represented to Plaintiffs that the foreclosure sale was postponed. (Id. ¶ 37.) In addition,

Plaintiffs allege that, on June 21, 2018, they received an email from First American Trustee 

Servicing Solutions explaining that the sale of the property was rescinded and the funds 

were returned to the purchaser. (Id. ¶ 49.) 

On June 26, 2018, the purchaser filed a motion to retroactively annul the stay with 

the bankruptcy court. (Id. ¶ 52.) On August 15, 2018, the bankruptcy court granted the 

motion and validated the foreclosure sale. (Id. ¶ 58.) On October 26, 2018, the bankruptcy 

court granted a motion for reconsideration of its prior order retroactively validating the 

foreclosure sale. (Id. ¶ 70.) 

While the third-party purchaser and Plaintiffs litigated the validity of the foreclosure 

sale, from August 15, 2018 to October 26, 2018, the period during which the foreclosure 

sale was validated, Defendants sent Plaintiffs billing statements for past due mortgage 

statements. (Id. ¶ 79.) Select sent a letter on September 28, 2018, noting that a foreclosure 

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sale was set for November 14, 2018. (Id. ¶ 145; at 116.) Additionally, on October 1, 2018, 

a notice of trustee sale was recorded setting a sale date of November 18, 2018. (Id. ¶ 147.) 

On April 17, 2019, the bankruptcy court granted Defendants’ motion for stay relief. 2 (Doc. 

No. 45-5.)

Discussion

I. Legal Standards

A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) tests the legal 

sufficiency of the pleadings and allows a court to dismiss a complaint if the plaintiff has 

failed to state a claim upon which relief can be granted. See Conservation Force v. Salazar, 

646 F.3d 1240, 1241 (9th Cir. 2011). The Federal Rule of Civil Procedure 8(a)(2)’s 

plausibility standard governs Plaintiff’s claims. The Supreme Court has explained Rule 

8(a)(2) as follows:

Under Federal Rule of Civil Procedure 8(a)(2), a pleading must contain a short and plain statement of the claim showing that the pleader is entitled to relief. 

As the Court held in [Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007)], the pleading standard Rule 8 announces does not require detailed factual 

allegations, but it demands more than an unadorned, the-defendant- unlawfully-harmed-me accusation. A pleading that offers labels and conclusions or a formulaic recitation of the elements of a cause of action will 

not do. Nor does a complaint suffice if it tenders naked assertions devoid of 

further factual enhancement.

Ashcroft v. Iqbal, 556 U.S. 662, 677–78 (2009) (citations, quotation marks, and brackets 

omitted).

In reviewing a Rule 12(b)(6) motion to dismiss, “[a] claim has facial plausibility 

when the plaintiff pleads factual content that allows the court to draw the reasonable 

inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678. 

“Factual allegations must be enough to raise a right to relief above the speculative level.” 

Twombly, 550 U.S. at 555 (citation omitted). In addition, a court need not accept legal 

conclusions as true. Iqbal, 556 U.S. at 678. Further, it is improper for a court to assume 

 

2 The Court takes judicial notice of the bankruptcy court’s “Order on Motion for Relief/Annulment of 

Automatic Stay” filed by Plaintiff as its authenticity is not subject to reasonable dispute. (Doc. No. 45-

5.) See Fed. R. Evid. 201(b)(2). 

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that the plaintiff “can prove facts which it has not alleged or that the defendants have 

violated the . . . laws in ways that have not been alleged.” Assoc. Gen. Contractors of Cal., 

Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 526 (1983). Finally, a court may 

consider documents incorporated into the complaint by reference and items that are proper

subjects of judicial notice. See Coto Settlement v. Eisenberg, 593 F.3d 1031, 1038 (9th 

Cir. 2010).

If the court dismisses a complaint for failure to state a claim, it must then determine 

whether to grant leave to amend. See Doe v. United States, 58 F.3d 494, 497 (9th Cir. 

1995). “A district court may deny a plaintiff leave to amend if it determines that allegation 

of other facts consistent with the challenged pleading could not possibly cure the 

deficiency, or if the plaintiff had several opportunities to amend its complaint and 

repeatedly failed to cure deficiencies.” Telesaurus VPC, LLC v. Power, 623 F.3d 998, 

1003 (9th Cir. 2010) (internal quotation marks and citations omitted).

II. Analysis

A. First Claim: Violation of 11 U.S.C. § 362 and 11 U.S.C. § 1301

Plaintiffs allege that Defendants knowingly violated 11 U.S.C. § 362 and 11 U.S.C. 

§ 1301. (Doc. No. 43 ¶¶ 103–27.) Defendants argue that Plaintiffs’ 11 U.S.C. § 362 and 

11 U.S.C. § 1301 claims fail because the bankruptcy court granted Defendants relief from 

the automatic stay. (Doc. No. 45-1 at 13–4.) Plaintiffs argue that the bankruptcy court’s 

ruling does not apply to 11 U.S.C. § 362 and 11 U.S.C. § 1301 violations. (Doc. No. 50 at 

19–23.) 

The Court agrees with Defendants. “Pursuant to 11 U.S.C. § 362, a petition in 

bankruptcy operates as a stay against acts that may affect property of the bankruptcy 

estate.” In re Nat’l Envtl. Waste Corp., 129 F.3d 1052, 1054 (9th Cir. 1997). Automatic 

stays serve “to protect debtors from all collection efforts while they attempt to regain their 

financial footing.” In re Schwartz, 954 F.2d 569, 571 (9th Cir. 1992). Actions violating 

an automatic stay are void. Id. at 571–72; In re Nat’l Envtl. Waste Corp., 129 F.3d at 1054. 

“However, section 362(d) ‘gives the bankruptcy court wide latitude in crafting relief from 

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the automatic stay, including the power to grant retroactive relief from the stay.’” In re 

Nat’l Envtl. Waste Corp., 129 F.3d at 1054 (quoting In re Schwartz, 954 F.2d at 572). “If 

a creditor obtains retroactive relief under section 362(d), there is no violation of the 

automatic stay. . . .” In re Schwartz, 954 F.2d at 573.

Here, the bankruptcy court granted Defendants’ motion for stay relief. (Doc. No. 

45-5.) Given that the bankruptcy court has the power to grant retroactive relief from a stay, 

and the bankruptcy court granted such relief in this case, no stay violation occurred. See

In re Schwartz, 954 F.2d 569, 573 (9th Cir. 1992) (“If a creditor obtains retroactive relief 

under section 362(d), there is no violation of the automatic stay. . . .”). Accordingly, 

Plaintiffs’ argument that Defendants violated 11 U.S.C. § 362 and 11 U.S.C. § 1301 is 

without merit. 

B. Second and Fourth Claims: Violation of 15 U.S.C. § 1692f(1) and 15 

U.S.C. § 1692e(2)(A)

Plaintiffs allege that Select violated the Fair Debt Collection Practices Act 

(“FDCPA”) by sending billing statements to Plaintiffs between August 15, 2018, and 

October 26, 2018, the period between which the bankruptcy court retroactively validated 

the foreclosure sale and subsequently invalidated it. (Doc. No. 43 ¶¶ 128–42, 151–65.) 

Specifically, Plaintiffs allege that Select violated 15 U.S.C. §§ 1692f(1) 3 and 15 U.S.C. § 

1692e(2)(A).

4

 (Id.) Defendants argue that Plaintiffs have insufficiently alleged that Select 

 

3 15 U.S.C. § 1692f(1) provides:

A debt collector may not use unfair or unconscionable means to collect or attempt to 

collect any debt. Without limiting the general application of the foregoing, the following 

conduct is a violation of this section:

(1) The collection of any amount (including any interest, fee, charge, or expense 

incidental to the principal obligation) unless such amount is expressly 

authorized by the agreement creating the debt or permitted by law.

4 15 U.S.C. § 1692e(2)(A) provides:

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is a “debt collector” within the meaning of the FDCPA, and that Plaintiffs’ claims under 

the FDCPA are without merit because the bankruptcy court invalidated the foreclosure 

sale. (Doc. No. 45-1 at 14–21.) Defendants also argue that Plaintiffs have not alleged 

unfair or unconscionable conduct as required under 15 U.S.C. § 1692f(1), and Plaintiffs 

have not provided facts alleging false representations under 15 U.S.C. § 1692e(2)(A). (Id.)

The U.S. Supreme Court recently held that “but for § 1692f(6), those who engage in 

only nonjudicial foreclosure proceedings are not debt collectors within the meaning of the 

[FDCPA].” Obduskey v. McCarthy & Holthus LLP, 139 S.Ct. 1029, 1038 (2019). Here, 

Plaintiffs allege claims under 15 U.S.C. § 1692f(1) and 15 U.S.C. § 1692e(2)(A), arguing 

that the June foreclosure extinguished their debt and that no money was currently or past 

due at that time, but that Select allegedly continued to attempt to collect debt from Plaintiffs 

and falsely represented that Plaintiffs had a debt. (Doc. No. 43 ¶¶ 128–42, 151–65.) Given 

that Plaintiffs allege that Defendant Select is a mortgage servicer and serviced Plaintiffs’ 

account, (see, e.g., id. ¶ 21), its “principal purpose . . . is the enforcement of security 

interests,” § 1692a(6). The FDCPA regulates its activity only through § 1692f(6). See

Obduskey, 139 S.Ct. at 1038 (describing the statutory language as a comprise under which 

“[t]he prohibitions contained in § 1692f(6) will cover security-interest enforcers, while the 

other ‘debt collector’ provisions of the Act will not.”). Accordingly, Plaintiffs’ 15 U.S.C. 

§ 1692f(1) and 15 U.S.C. § 1692e(2)(A) claims against Select are dismissed.

C. Third Claim: Violation of 15 U.S.C. § 1692f(6)

Plaintiffs claim that the June foreclosure removed Select’s right to possession of the 

 

A debt collector may not use any false, deceptive, or misleading representation or means 

in connection with the collection of any debt. Without limiting the general application of 

the foregoing, the following conduct is a violation of this section:

. . . .

(2) The false representation of--

(A) the character, amount, or legal status of any debt. . . .

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property, but that Select allegedly filed a notice of trustee sale and sent a letter indicating 

that another foreclosure sale was set to occur in violation of 15 U.S.C. § 1692f(6). (Doc. 

No. 43 ¶¶ 143–50.) Defendants contend that the communications do not amount to a 

violation, that Select was required to send monthly statement to Plaintiffs, and that 

Plaintiffs should be judicially estopped from making inconsistent arguments. (Doc. No. 

45-1 at 14–21.)

The Court agrees with Defendants. In relevant part, 15 U.S.C. § 1692f(6) provides 

that a debt collector violates the section by “[t]aking or threatening to take any nonjudicial 

action to effect dispossession or disablement of property if . . . there is no present right to 

possession of the property claimed as collateral through an enforceable security interest

[.]” 15 U.S.C. § 1692f(6); see also Obduskey, 139 S.Ct. at 1038 (describing the statutory 

language as a comprise under which “[t]he prohibitions contained in § 1692f(6) will cover 

security-interest enforcers[.]”). 

Here, Plaintiffs have not sufficiently alleged that Select did not have a “present right 

to possession of the property claimed as collateral through an enforceable security interest.” 

15 U.S.C. § 1692f(6). Plaintiffs allege that, after the June foreclosure sale, they received 

notice from First American Trustee Servicing Solutions that the sale of the property had 

been rescinded due to the bankruptcy filing and the funds were returned to the third-party

purchaser. (Doc. No. 43 ¶ 49.) During this time, the third-party purchaser filed a motion 

for relief/annulment of the automatic stay with the bankruptcy court. (Id. ¶ 52.) On August 

24, 2018, the bankruptcy court issued a final order validating the foreclosure sale. (Id. ¶ 

63.) Plaintiffs filed a motion for reconsideration three days later, on August 27, 2018. (Id.

¶ 67.) On October 26, 2018, the bankruptcy court issued an order granting reconsideration 

of its prior order and held that the sale was not valid. (Id. ¶ 69.) 

While Plaintiffs and the third-party purchaser litigated the validity of the sale, 

Plaintiffs allege that the mortgage servicer, Select, sent a letter on September 28, 2018, 

noting that a foreclosure sale was set for November 14, 2018. (Id. ¶ 145; at 116.) 

Additionally, Plaintiffs allege that on October 1, 2018, a notice of trustee sale was recorded 

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setting a sale date of November 18, 2018. (Id. ¶ 147.) 

Thus, according to Plaintiffs allegations, Defendants rescinded the foreclosure sale, 

returned the funds to the third-party purchaser, and then rescheduled a foreclosure sale 

during the time that Plaintiff and the third-party litigated their rights to the property 

between one another. Indeed, as Plaintiffs note, the foreclosure sale was subsequently 

invalidated. Under these circumstances, based on Plaintiffs’ allegations and attached 

exhibits, the Court concludes that Plaintiffs have not sufficiently alleged a 15 U.S.C. § 

1692f(6) violation. 

D. Fifth and Sixth Claims: Violation of Cal. Civ. Code § 1788.17

Plaintiffs bring two claims against Defendants for violation of the Rosenthal Fair 

Debt Collection Practices Act (“Rosenthal Act”), Cal. Civ. Code § 1788.17. (Doc. No. 43

¶¶ 166–88.) Plaintiffs base their Rosenthal Act claims on their previous claims that Select 

violated the FDCPA. (Id.) Defendants argue that Plaintiffs’ Rosenthal Act claims fail 

because those claims are based on their FDCPA claims. (Doc. No. 45-1 at 17–18.) 

Plaintiffs argue that even if Defendants are not “debt collectors” under the FDCPA, the 

Rosenthal Act provides a broader definition of “debt collector,” under which Defendants 

fall and may be held liable for Rosenthal Act violations. (Doc. No. 50 at 37–39.) Plaintiffs 

also argue that they alleged that Select is an agent of Well Fargo can thus Wells Fargo can 

be held vicariously liable for Selects actions. (Id.)

The Court agrees with Defendants. “The [Rosenthal Act] requires all debt collectors 

attempting to collect a consumer debt to comply with the [FDCPA], 15 U.S.C. §§ 1692b 

through 1692j.” Langan v. United Servs. Auto. Assoc., 69 F. Supp. 3d 965, 981 (N.D. Cal. 

2014) (citing Cal. Civ. Code § 1788.17). “[A] plaintiff may state a claim for violation of 

the Rosenthal Act simply by showing that a defendant violated any of several provisions 

of the FDCPA.” Id. Plaintiff concedes that that its Cal. Civ. Code § 1788.17 claims are 

premised on its FDCPA claims. (Doc. No. 50 at 37.) Given that the Court dismiss 

Plaintiffs’ FDCPA claims against Select, the Court likewise dismiss Plaintiffs’ Rosenthal 

Act claims against Defendants, which are premised on the FDCPA claims. 

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E. California Business and Professional Code § 17200

Plaintiffs bring claims for violation of California Business and Professional Code § 

17200. (See Doc. No. 43 ¶¶ 203–206.) Defendants argue that Plaintiffs have not alleged 

unlawful conduct or unfair conduct. (Doc. No. 45-1 at 22–25.)

California Business and Professional Code § 17200 (“UCL”) prohibits unfair 

competition, including “any unlawful, unfair or fraudulent business act.” The “unlawful” 

prong of the UCL borrows violations of other laws and makes them separately actionable. 

See Klein v. Chevron U.S.A., Inc., 202 Cal. App. 4th 1342, 1383 (2012). Virtually any 

statute, law, or regulation can serve as a predicate for a UCL unlawful-practice violation.

See id. “An unfair business practice is one that either ‘offends an established public policy’

or is ‘immoral, unethical, oppressive, unscrupulous or substantially injurious to 

consumers.’” McDonald v. Coldwell Banker, 543 F.3d 498, 506 (9th Cir. 2008) (citations 

omitted). 

Here, as discussed above, Plaintiffs cannot maintain claims under 11 U.S.C. §§ 362 

and 1301, the FDCPA, or the Rosenthal Act. Accordingly, they cannot maintain a UCL 

claim based on these claims. See Klein, 202 Cal. App. 4th at 1383. Plaintiffs also argue 

that Defendants “falsely reported [on] July 10, 2018 that $96,740.00 was past due and that 

the current balance owed was $763,986.00 by [Plaintiffs]” in violation of Cal. Civ. 

1785.25(a). (Doc. No. 43 ¶ 195.) Cal. Civ. 1785.25(a) provides, “a person shall not finish 

information on a specific transaction or experience to any consumer reporting agency if the

person knows or should know the information is incomplete or inaccurate.” Plaintiffs 

argue that, because the foreclosure sale occurred in June, the credit reports were false. 

However, given Defendants had rescinded the foreclosure sale and returned the funds to 

the third-party purchaser, and that Plaintiffs and the third-party purchaser continued to 

litigate the validity of the sale, Plaintiffs have not alleged facts that, if true, demonstrate

that Defendants knew or should have known that the information reported was false. 

Plaintiffs also generally allege that Defendants conduct was unfair within the 

meaning of the UCL. (See Doc. No. 43 ¶¶ 203-206.) In their opposition, Plaintiffs argue 

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that Defendants “lulled [Plaintiffs] into believing that the foreclosure would not take place” 

and one subsequently was held. (Doc. No. 50 at 42–43.) Given that Plaintiffs allege that 

they filed for bankruptcy protection for the sixth time within three years on June 15, 2018, 

three days before the scheduled foreclosure date, and given that Defendants had rescinded 

the foreclosure sale and returned the funds to the third-party purchaser two days after the 

sale, the Court finds that Plaintiffs have not alleged facts that “offend[] an established 

public policy” or are “immoral, unethical, oppressive, unscrupulous or substantially 

injurious to consumers.” McDonald v. Coldwell Banker, 543 F.3d 498, 506 (9th Cir. 2008)

(citations omitted). Accordingly, Plaintiffs claim that Defendants violated the UCL is 

dismissed.

F. Motion to Strike

On May 21, 2019, Defendants filed a motion to strike portions of Plaintiffs’ third 

complaint. (Doc. No. 46.) Given that the Court dismisses the complaint in its entirety, the 

Court denies as moot Defendants’ motion to strike. 

On June 28, 2019, Plaintiffs filed an objection to Defendants’ reply and requested 

that the Court strike matters raised by Defendants. (Doc. No. 55.) Exercising the Court’s 

discretion, the Court denies Plaintiffs’ motion to strike. 

Conclusion

For the foregoing reasons, the Court grants Defendants’ motion to dismiss. Given 

that Plaintiffs have had three opportunities to amend their complaint, and given that the 

Court does not believe that Plaintiffs can cure the deficiencies detailed in this order, the 

Court does not grant leave to amend. See Telesaurus, 623 F.3d at 1003. Finally, the Court 

denies the motions to strike.

IT IS SO ORDERED.

DATED: July 17, 2019

 

MARILYN L. HUFF, District Judge

UNITED STATES DISTRICT COURT

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