Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_09-cv-03429/USCOURTS-caed-2_09-cv-03429-0/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 TO SHOW CAUSE 

This matter comes before the Court on a Motion to Dismiss 

by 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 

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Registration System, Inc., (collectively “Defendants”). 

Defendants seek to dismiss Plaintiffs Jose and Alicia Soto’s 

(“Plaintiffs’”) Complaint, pursuant to Federal Rule of Civil 

Procedure 12(b)(6) for failure to state a claim. Defendants also 

bring a Motion to Strike, pursuant to Federal Rule of Civil 

Procedure 12(f) and Motion for Attorney’s Fees and Costs, 

pursuant to Federal Rule of Civil Procedure 11(c). Plaintiffs do 

not oppose any of the motions.1

FACTUAL AND PROCEDURAL BACKGROUND 

On June 4, 2009, Plaintiffs filed suit in the Eastern 

District of California, before the Honorable Garland E. Burrell, 

Jr. [Civil Docket #2:09-cv-01546-GEB-EFB]. Plaintiffs’ Complaint 

arose from a loan transaction for a residential property located 

at 9686 Early Light Way, Elk Grove, California. The original 

Complaint alleged federal claims for violation of the Truth in 

Lending Act, the Real Estate Settlement Procedures Act, 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 covenant of good faith and fair dealing. Defendants moved 

to dismiss this Complaint for failure to state a claim. 

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 These motions were determined to be suitable for decision 

without oral argument. E.D. Cal. L.R. 230(g). 

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Prior to a hearing on the motion to dismiss, Plaintiffs 

filed an Amended Complaint. The Amended Complaint was 

substantially identical to the original Complaint, with the 

addition of a cause of action for violation of California Civil 

Code §1632, and a new allegation regarding a pre-payment 

penalty. Defendants again moved to dismiss the Amended 

Complaint for failure to state a claim. Defendants also served, 

but did not file, a motion for Rule 11 sanctions, because 

Plaintiffs’ Amended Complaint was substantially identical to 

Plaintiffs’ original boilerplate complaint. Defendants informed 

Plaintiffs that if they did not dismiss the amended complaint 

within 21 days, Defendants would file the motion for Rule 11 

sanctions. On October 29, 2009, Plaintiffs voluntarily dismissed 

the Amended Complaint, without prejudice. On October 30, 2009, 

Plaintiffs filed in state court the Complaint that is presently 

before the court. 

Plaintiffs current Complaint is substantially identical to 

the two complaints previously filed before Judge Burrell. The 

Complaint alleges 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 covenant of good faith and fair dealing. 

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Because of the federal RESPA claim, Defendants removed 

Plaintiffs’ Complaint from Sacramento County Superior Court on 

December 10, 2009. Defendants then brought the present motion to 

dismiss, and filed the previously threatened motion for Rule 11 

sanctions. Plaintiffs have failed to file any response to these 

present motions. 

Motion to Dismiss

Plaintiffs have not filed an opposition to the present 

Motion to Dismiss. Plaintiffs are hereby ordered, within ten 

(10) days from the date of this Order, to show cause why the 

Court should not grant the motion to dismiss in its entirety and 

dismiss the entire action with prejudice. 

Sanctions for Violation of the Local Rules

Local Rule 230(c) requires a party responding to a motion 

to file either an opposition to the motion or a statement of 

non-opposition, no less than fourteen (14) days preceding the 

noticed hearing date. Here, counsel for Plaintiffs did not 

timely file any response, either an opposition or a statement of 

non-opposition, to Defendants’ Motion to Dismiss. 

Local Rule 110 authorizes the Court to impose sanctions for 

“failure of counsel or of a party to comply with these Rules.” 

Therefore, the Court will sanction Plaintiffs’ counsel, Michael 

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J.M. Brook, $250.00 payable to the Clerk of the Court within ten 

(10) days from the date of this Order, unless he shows good 

cause for his failure to comply with the Local Rules. This 

sanction is against counsel only. Counsel may not pass on the 

cost of this sanction to Plaintiffs via attorney’s fees or 

costs. 

Rule 11 Sanctions

 Defendants’ motion for Rule 11 sanctions alleges that 

Plaintiffs have now filed three virtually identical complaints 

regarding the same loan transaction and the same property, all 

of which fail to state viable claims for relief and were brought 

for improper purposes. Plaintiffs’ counsel attempted to avoid 

Rule 11 sanctions by dismissing the Amended Complaint in Federal 

Court and re-filing it in State Court. This time, he has failed 

to respond at all, either to prosecute the case on behalf of his 

clients or to dismiss the case if his clients no longer wish to 

proceed. 

Defendants have incurred substantial attorney’s fees and 

costs in the process of defending themselves and responding to 

each complaint. Plaintiffs’ counsel has also caused significant 

burden on the Court by his repeated filings of virtually 

identical boilerplate complaints. 

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 Rule 11(b), governing representations to the court, 

requires that an attorney presenting the court with a pleading 

certify that (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) that the claims, 

defenses and other legal contentions are warranted by existing 

law or by a 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 after a 

reasonable opportunity for further investigation or discovery; 

and (4) the denials of factual contentions are warranted on the 

evidence or, if specifically so identified, are reasonably based 

on belief or lack of information. 

Rule 11(c) allows for the imposition of appropriate 

sanctions, including monetary sanctions, and states that absent 

exceptional circumstances, a law firm must be held jointly 

responsible for a violation committed by its partner, associate, 

or employee. 

Rule 11(c)(2) requires a party moving for sanctions to 

first serve, but not file, the motion for sanctions on opposing 

counsel. If opposing counsel does not withdraw or appropriately 

correct the challenged paper within 21 days, the moving party 

may file the motion for sanctions with the court. Defendants 

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properly followed this procedure in the previous action in front 

of Judge Burrell, however in the present action they filed the 

motion for sanctions immediately, rather than first serving 

opposing counsel and waiting the requisite 21 days. 

However, the Court believes that Rule 11 sanctions are 

warranted. Accordingly, pursuant to Rule 11(c)(3) the Court is 

ordering attorney Michael J.M. Brook to show cause why the 

conduct specifically described in this order has not violated 

Rule 11(b). Absent a showing of good cause, the Court will 

impose sanctions by requiring Michael J.M. Brook and the law 

firm of Lanahan and Reilley, LLP to pay Defendants’ attorney’s 

fees, in the amount of $8,160.00. The cost of this sanction is 

to be borne solely by counsel and his law firm, it is not to be 

passed on to Plaintiffs via fees or costs. 

 

III. ORDER 

 For the reasons set forth above, Attorney Michael J.M. 

Brook is ordered, within ten (10) days of the date of this Order 

to show cause why the Motion to Dismiss should not be granted, 

with prejudice. It is further ordered that Michael J.M. Brook 

show cause why he and the law firm of Lanahan and Reilley, LLP 

should not be liable for Rule 11 sanctions. Absent a showing of 

good cause the Court will impose Rule 11 sanctions jointly for 

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payment of Defendants’ attorney’s fees in the amount of 

$8,160.00. 

Lastly, it is ordered that within ten (10) days of this 

Order Michael J.M. Brook shall either (1) pay sanctions of 

$250.00 to the Clerk of the Court, or (2) submit a statement of 

good cause explaining his failure to comply with Local Rule 

230(c). 

IT IS SO ORDERED. 

Dated: February 19, 2010 

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