IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF OREGON

KRISTY MORGAN,

Plaintiff,

v.

JP MORGAN CHASE BANK;

SAFEGUARD PROPERTIES

MANAGEMENT, INC.; LPS FIELD

SERVICES, INC.; BAXTER &

BAXTER; and LYNDON RUHNKE, 

Defendants.

3:13-CV-00842-BR

 

AMENDED

OPINION AND ORDER 

SANDY N. WEBB

Skyline Building

0224 S.W. Hamilton St

Suite 202

Portland, OR 97239

(503) 477-7731

Attorney for Plaintiff

MICHAEL J. FARRELL

THOMAS W. PURCELL

Martin Bischoff Templeton Langslet & Hoffman 

888 S.W. Fifth Avenue, Suite 900

Portland, Oregon 97204

(503) 224-3113

Attorneys for Defendant JP Morgan Chase Bank

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KATHRYN P. SALYER

ELEANOR A. DUBAY

Tomasi Salyer Baroway

121 S.W. Morrison Street, Suite 1850

Portland, Oregon 97204

(503) 894-9900

Attorneys for Defendant Safeguard Properties

Management, Inc.

LOUIS A. SANTIAGO

GARRETT S. GARFIELD

Holland & Knight, LLP

2300 US Bancorp Tower

111 S.W. Fifth Avenue

Portland, OR 97204

(503) 243-2300 

Attorneys for Defendant LPS Field Services, Inc.

PAUL SILVER

KATIE M. EICHNER 

Lindsay Hart Neil & Weigler, LLP

1300 S.W. Fifth Avenue

Suite 3400

Portland, OR 97201

(503) 226-7677 

Attorneys for Defendants Baxter & Baxter and Lyndon

Ruhnke

BROWN, Judge.

This matter comes before the Court on the Motion (#29) to

Dismiss of Defendants Baxter & Baxter and Lyndon Ruhnke. For the

reasons that follow, the Court GRANTS Defendants' Motion and

dismisses Plaintiff's claims for legal malpractice without

prejudice.

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BACKGROUND

The following facts are taken from Plaintiff's [Second]

Amended Complaint.

Plaintiff Kristy Morgan was the owner of Unit 54, 14946 S.W.

109th Avenue, Tigard, Oregon.

From April through July 2010 Plaintiff worked with "the bank

toward a modification."1 Plaintiff and the bank were not able to

come to an agreement regarding modification.

On June 19, 2010, Plaintiff filed for bankruptcy "using the

services of [Defendant] Baxter & Baxter." 

On July 6, 2010, "Baxter & Baxter advised [Plaintiff] 

. . . about her homeowner’s association fees and her need to move

out of the house to surrender it to the bank in accordance with

her petition."

At some point before mid-January 2011 Plaintiff was locked

out of her unit and "told repeatedly [her unit] was being taken." 

In mid-January 2011 Plaintiff was locked out of her unit again

while she was trying to move out.

In February 2011 Plaintiff was locked out of her unit

without notice. 

In April 2011 "the foreclosure notice was posted on her home

stating the home was to be sold in August 2011. [Plaintiff] was

1

 Plaintiff does not identify "the bank" and does not allege

the reason she began working with the bank "toward modification."

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never told the sale was rescinded."

In July and August 2011 Defendant LPS Field Services, Inc.,

entered Plaintiff's unit after incorrectly "declaring it . . .

vacant."

In August 2012 and April 2013 Defendant Safeguard Properties

Management, Inc., entered Plaintiff's unit "repeatedly." 

Plaintiff alleges she "left behind numerous items that are now

missing."

At some point "[t]he HOA [Homeowners Association]2 Garnished

[sic] wages in the amount of $9,455.87 from [P]laintiff’s

paycheck."

On May 18, 2013, Plaintiff filed an action in this Court

against JP Morgan Chase Bank; Safeguard Properties, Inc. (SPI);

Lender Processing Services, Inc. (LPS); Baxter & Baxter; and

Lyndon Ruhnke. Plaintiff asserted this Court has federalquestion jurisdiction and supplemental jurisdiction over her

claims for (1) breach of contract by JP Morgan Chase, LPS, and

SPI; (2) violation of the Fair Debt Collection Practices Act

(FDCPA), 15 U.S.C. §§ 1692d and 1692e(5) by JP Morgan Chase; 

(3) trespass by JP Morgan Chase, SPI, and LPS; (4) conversion by

JP Morgan Chase, SPI, and LPS; and (5) negligence/legal

malpractice by Baxter & Baxter and Ruhnke.

2

 The Homeowners Association is not a defendant in this

matter.

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On June 24, 2013, Baxter & Baxter and Ruhnke filed a Motion

to Dismiss Plaintiff's claims against them for negligence/legal

malpractice.

On July 11, 2013, Plaintiff filed a Motion for Leave to File

Amended Complaint on the ground that LPS and SPI were incorrectly

named parties. Plaintiff sought leave to amend her Complaint to

bring claims against LPS Field Services, Inc. (LPSF) and

Safeguard Properties Management, LLC (SPM) rather than LPS and

SPI. 

On July 15, 2013, the Court granted Plaintiff's Motion for

Leave and directed Defendants to either stand on their responses

to Plaintiff's initial Complaint or to file new responsive

pleadings by July 26, 2013.

On July 19, 2013, Plaintiff filed an Amended Complaint

against JP Morgan Chase, SPM, LPSF, Baxter & Baxter, and Ruhnke. 

Plaintiff brings claims for (1) breach of contract against JP

Morgan Chase; (2) violation of §§ 1692d and 1692e(5) of the FDCPA

by JP Morgan Chase; (3) trespass by JP Morgan Chase, SPM, and

LPSF; (4) conversion by JP Morgan Chase, SPM, and LPSF; and 

(5) legal malpractice by Baxter & Baxter and Ruhnke.

On July 24, 2013, Plaintiff filed a [Second] Amended

Complaint only to modify the heading. Plaintiff's claims

remained unchanged.

The Court took the Motion to Dismiss of Defendants Baxter &

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Baxter and Ruhnke under advisement on July 23, 2013.

STANDARDS

To survive a motion to dismiss, a complaint must

contain sufficient factual matter, accepted as

true, to “state a claim to relief that is

plausible on its face.” [Bell Atlantic v.

Twombly, 550 U.S. 554,] 570, 127 S. Ct. 1955. 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. Id. at 556.

. . . 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. Ibid. Where a complaint pleads

facts that are “merely consistent with” a

defendant's liability, it “stops short of the line

between possibility and plausibility of

‘entitlement to relief.’” Id. at 557, 127 S. Ct.

1955 (brackets omitted).

Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009). See also Bell

Atlantic, 550 U.S. at 555-56. The court must accept as true the

allegations in the complaint and construe them in favor of the

plaintiff. Intri-Plex Tech., Inc. v. Crest Group, Inc., 499 F.3d

1048, 1050 n.2 (9th Cir. 2007). 

"In ruling on a 12(b)(6) motion, a court may generally

consider only allegations contained in the pleadings, exhibits

attached to the complaint, and matters properly subject to

judicial notice." Swartz v. KPMG LLP, 476 F.3d 756, 763 (9th

Cir. 2007)(citing Jacobson v. Schwarzenegger, 357 F. Supp. 2d

1198, 1204 (C.D. Cal. 2004)). A court, however, "may consider a

writing referenced in a complaint but not explicitly incorporated

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therein if the complaint relies on the document and its

authenticity is unquestioned." Id. (quoting Parrino v. FHP,

Inc., 146 F.3d 699, 706 (9th Cir. 1998), superseded by statute on

other grounds as stated in Abrego v. Dow Chem. Co., 443 F.3d 676

(9th Cir. 2006)).

DISCUSSION

Defendants Ruhnke and Baxter & Baxter move to dismiss

Plaintiff's legal-malpractice claims against them for lack of

subject-matter jurisdiction. Specifically, Defendants contend

Plaintiff's legal-malpractice claims against Ruhnke and Baxter &

Baxter do not derive from the common nucleus of operative facts

underlying Plaintiff's federal claims (i.e., Plaintiff's FDCPA

claims against JP Morgan Chase), and, therefore, this Court does

not have supplemental jurisdiction over Plaintiff's legalmalpractice claims.

I. Supplemental Jurisdiction

28 U.S.C. § 1367(a) provides in pertinent part: 

[I]n any civil action of which the district courts

have original jurisdiction, the district courts

shall have supplemental jurisdiction over all

other claims that are so related to claims in the

action within such original jurisdiction that they

form part of the same case or controversy under

Article III of the United States Constitution.

"A state law claim is part of the same case or controversy

when it shares a 'common nucleus of operative fact' with the

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federal claims and the state and federal claims would normally be

tried together." Bahrampour v. Lampert, 356 F.3d 969, 978 (9th

Cir. 2004)(quoting Trs. of the Constr. Indus. & Laborers Health &

Welfare Trust v. Desert Valley Landscape Maint., Inc., 333 F.3d

923, 925 (9th Cir. 2003)). Courts have concluded they lack

supplemental jurisdiction over state-law claims that do not

derive from a common nucleus of operative fact with federal

claims. See, e.g., Soliday v. Miami County, Ohio, 55 F.3d 1158

(6th Cir. 1995); Ray v. Tenn. Valley Auth., 677 F.2d 818, 826

(11th Cir. 1982).

II. Analysis

Plaintiff's federal claims arise under the FDCPA and are

asserted only against JP Morgan Chase. According to Plaintiff's

Amended Complaint, the factual allegations underlying her FDCPA

claims are Defendants' alleged

conduct . . . in connection with the collection of

a debt by stating [Defendant] would be sending

people to [Plaintiff's unit] to repeatedly inspect

[her unit] until the debt was paid. . . . [And] by

stating [Plaintiff's unit] would be foreclosed

upon and having no intent to do so.

Am. Compl. at ¶¶ 20-21. Although it is not completely clear from

the Amended Complaint, it appears the debt underlying Plaintiff's

FDCPA claims is her mortgage and her FDCPA claims relate to

efforts by JP Morgan Chase to collect and/or to foreclose on her

mortgage and trust deed.

With respect to her legal-malpractice claims, Plaintiff

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alleges in her Amended Complaint that Ruhnke and Baxter & Baxter

"advised her . . . about her homeowner's association fees and her

need to move out of the house to surrender it to the bank in

accordance with her [Bankruptcy] petition." Am. Compl. ¶ 10. 

Plaintiff alleges Ruhnke and Baxter & Baxter "failed to use that

degree of care, skill, and diligence ordinarily used by attorneys

practicing in the same or similar circumstances in the same or

similar community." Am. Compl. ¶ 33. Finally, Plaintiff alleges

Ruhnke and Baxter & Baxter's actions "resulted in [Plaintiff] 

. . . being forced to involuntarily pay HOA fees after she was

out of the home." Am. Compl. ¶ 33. Plaintiff's legalmalpractice claims, therefore, involve Plaintiff's HOA dues

rather than her mortgage and relate to Ruhnke and Baxter &

Baxter's actions in Plaintiff's bankruptcy proceedings. Those

facts are unrelated to the efforts by JP Morgan Chase to collect

on Plaintiff's mortgage and/or to foreclose on Plaintiff's unit. 

In other words, the Court's decision on Plaintiff's FDCPA claims

would not impact a decision as to the alleged legal malpractice

and vice versa.

In addition, to state a claim under § 1692d of the FDCPA a

plaintiff must allege a debt collector "engag[ed] in . . .

conduct the natural consequence of which [was] to harass,

oppress, or abuse [the plaintiff] in connection with the

collection of a debt." To state a claim under § 1692e(5) of the

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FDCPA a plaintiff must allege a debt collector threatened "to

take any action that cannot legally be taken or that is not

intended to be taken." In contrast, to state a claim for legal

malpractice under Oregon law a plaintiff must allege 

"(1) a duty that runs from the defendant to the

plaintiff; (2) a breach of that duty; (3) a

resulting harm to the plaintiff measurable in

damages; and (4) causation, i.e., a causal link

between the breach of duty and the harm.” 

Woods v. Hill, 248 Or. App. 514, 525 (2012)(quoting Stevens v.

Bispham, 316 Or. 221, 227, 851 P.2d 556 (1993))(emphasis in

original). The facts and elements that Plaintiff must plead and

prove to establish her FDCPA claims are markedly different than

those she must plead and prove to establish her legal-malpractice

claims. Plaintiff's FDCPA claims are "separately maintainable

and determinable without any reference to the facts alleged or

contentions stated in or with regard to" Plaintiff's legalmalpractice claims. See Hales v. Winn-Dixie Stores, Inc., 500

F.2d 836, 847-48 (4th Cir. 1974)(the plaintiff's state-law claim

against his employer for failure to make payments allegedly due

under a profit-sharing program and the plaintiff's federal claim

that his employer failed to provide information required by

federal statute were “separately maintainable and determinable

without any reference to the facts alleged or contentions stated

in or with regard to the other count,” and, therefore, the claims

did not arise from a “common nucleus of operative fact.”). 

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The Court, therefore, concludes Plaintiff's legalmalpractice claims do not arise from the common nucleus of

operative fact underlying Plaintiff's federal claims. Thus, this

Court lacks supplemental jurisdiction over those claims. See

Ray, 677 F.2d at 825-26 ("The [plaintiff's legal-]malpractice

claim . . . is wholly separate from the [plaintiff's] federal

claims both as to the facts necessary to prove the claim and the

theory of recovery. Hence, we conclude that the malpractice

claim and the federal claims did not arise from a 'common nucleus

of operative fact' and consequently the district court lacked the

power to hear the malpractice claim."). 

Accordingly, the Court grants Defendants' Motion to Dismiss

Plaintiff's legal-malpractice claims on the ground that this

Court lacks subject-matter jurisdiction. The Court, therefore,

dismisses those claims without prejudice. 

CONCLUSION

For these reasons, the Court GRANTS the Motion (#29) to

Dismiss of Defendants Baxter & Baxter and Lyndon Ruhnke and 

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DISMISSES Plaintiff's legal-malpractice claims without prejudice.

IT IS SO ORDERED.

DATED this 22nd day of October, 2013.

/s/ Anna J. Brown

 

ANNA J. BROWN

United States District Judge

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