Court Opinion

ID: 4154087
Source: CourtListenerOpinion
Date Created: 2017-03-20 20:00:54.738771+00
Date Added: 2024-06-11T07:46:36.735015
License: Public Domain

FILED
                           NOT FOR PUBLICATION
                                                                            MAR 20 2017
                    UNITED STATES COURT OF APPEALS                       MOLLY C. DWYER, CLERK
                                                                          U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

WILLIAM J. PAATALO,                              No.   14-35931

              Plaintiff-Appellant,               D.C. No.
                                                 1:13-cv-00128-SEH-CSO
 v.

JPMORGAN CHASE BANK, N.A., as                    MEMORANDUM*
acquirer of certain assets and liabilities of
Washington Mutual Bank from the Federal
Deposit Insurance Corporation, as
Receiver for Washington Mutual Bank and
U.S. BANK NA, as Trustee, as successor
in interest to Bank of America, National
Association, as Trustee, as successor by
merger to Lasalle Bank, National
Association, as Trustee for WAMU
Mortgage pass through certificate series
2007-OA3 Trust,

              Defendants-Appellees.

WILLIAM J. PAATALO,                              No.   15-35445

              Plaintiff-Appellant,               D.C. No. 1:13-cv-00128-SEH

 v.

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
THE MACKOFF/KELLOGG LAW
FIRM; et al.,

              Defendants-Appellees,

 and

JPMORGAN CHASE BANK, N.A., as
acquirer of certain assets and liabilities of
Washington Mutual Bank from the Federal
Deposit Insurance Corporation, as
Receiver for Washington Mutual Bank and
U.S. BANK NA, as Trustee, as successor
in interest to Bank of America, National
Association, as Trustee, as successor by
merger to Lasalle Bank, National
Association, as Trustee for WAMU
Mortgage pass through certificate series
2007-OA3 Trust,

              Defendants.

                   Appeal from the United States District Court
                           for the District of Montana
                    Sam E. Haddon, District Judge, Presiding

                       Argued and Submitted March 7, 2017
                                Portland, Oregon

Before: O’SCANNLAIN, FISHER, and FRIEDLAND, Circuit Judges.

       William Paatalo appeals from the district court’s grant of summary judgment

dismissing his Montana state law claims against the Mackoff Kellogg Law Firm,

Charles Peterson, and Jason Henderson (collectively “Mackoff”). He also appeals

                                          2
from the district court’s grant of a Fed. R. Civ. P. 12(b)(6) motion dismissing his

claims against J.P. Morgan Chase Bank (“Chase”) and U.S. Bank, Trustee of the

WaMu Mortgage Pass-Through Certificates Series 2007-OA3 Trust (the Trust

itself is referred to as the “2007-OA3 Trust” and the Trustee is referred to as “U.S.

Bank, Trustee”). Because the facts are known to the parties, we repeat them only as

necessary to explain our decision.

                                           I

      The district court did not err in dismissing Paatalo’s claims of actual fraud,

constructive fraud, and negligent misrepresentations against Mackoff. Paatalo’s

claims arise from alleged misrepresentations made by Mackoff regarding its

capacity as trustee of the 2007-OA3 Trust during previous litigation between the

parties.1 Paatalo v. J.P. Morgan Chase Bank, No. CV 10-119-BLG-CSO, 2012
WL 2505742 (D. Mont. June 28, 2012) (hereinafter Paatalo I). Paatalo’s claims

fail because there is no evidence that Paatalo had a right to rely on any

representation made or that Paatalo was ignorant of the falsity of any

representation. See Mont. Code Ann. § 28-2-406 (defining constructive fraud);

Harpole v. Powell Cnty. Title Co., 309 P.3d 34, 38 (Mont. 2013) (defining

      1
        That litigation concerned Chase’s attempt to foreclose on Paatalo’s
property. Mackoff was the trustee of the Deed of Trust of such property.
                                           3
negligent misrepresentation); Town of Geraldine v. Mont. Mun. Ins. Auth., 198
P.3d 796, 801 (Mont. 2008) (defining actual fraud).

                                           II

                                           A

      The district court properly dismissed Paatalo’s claims of (1) breach of

contract, (2) breach of implied covenant, (3) libel, and (4) violation of the Fair

Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq., because they

were barred by issue preclusion. All of the key factual issues underlying the current

claims were resolved against Paatalo in Paatalo I. Issue preclusion applies if “(1)

the issue at stake was identical in both proceedings; (2) the issue was actually

litigated and decided in the prior proceedings; (3) there was a full and fair

opportunity to litigate the issue; and (4) the issue was necessary to decide the

merits.” Oyeniran v. Holder, 672 F.3d 800, 806 (9th Cir. 2012).

      In Paatalo I the court concluded that the Mackoff settlement did not bind

Chase or the 2007-OA3 Trust. 2012 WL 2505742, at *11–12. This knocks out the

breach of contract and breach of implied covenant claims, since they are based on

the factual premise that the settlement did bind Chase and the 2007-OA3 Trust.

The Paatalo I court also concluded that the Note and Deed of Trust were

enforceable and Chase had the right to initiate a non-judicial foreclosure on

                                           4
Paatalo’s property. Id. at *7. Paatalo’s libel and FDCPA claims rely on the factual

premise that the Note and Deed of Trust are invalid and unenforceable. Thus, issue

preclusion bars these claims for reasons similar to the contract claims. To the

extent the libel and FDCPA claims are based on the binding nature of the Mackoff

settlement, these claims fail for the same reason the contract claims fail.

                                            B

       Finally, we are left with Paatalo’s claims of actual fraud, constructive fraud,

and negligent misrepresentations against U.S. Bank, Trustee. These claims are

based on the same factual premises as the claims against Mackoff discussed above.

The district court erred in concluding that claim preclusion barred these claims,

because Paatalo could not have brought them at the time he filed his complaint in

Paatalo I. See Cabrera v. City of Huntington Park, 159 F.3d 374, 382 n.12 (9th

Cir. 1998) (per curiam) (concluding that claim preclusion does not block a claim

that “arose” while a prior suit “was already pending”).2 Nevertheless, all these

claims still fail for the same merits-based reasons that the claims against Mackoff

fail. The district court’s error is harmless.

                                            III

       2
       As discussed above, these claims arise from supposed misrepresentations
made to Paatalo by the defendants during the Paatalo I litigation.
                                                5
The judgment of the district court is AFFIRMED.

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