Court Opinion

ID: 4215667
Source: CourtListenerOpinion
Date Created: 2017-10-27 20:01:50.989926+00
Date Added: 2024-06-11T09:23:46.448132
License: Public Domain

FILED
                           NOT FOR PUBLICATION
                                                                            OCT 27 2017
                    UNITED STATES COURT OF APPEALS                       MOLLY C. DWYER, CLERK
                                                                          U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

KARL P. LIZZA; et al.,                           No.   14-16483

              Plaintiffs-Appellants,             D.C. No.
                                                 1:13-cv-00190-HG-BMK
 v.

DEUTSCHE BANK NATIONAL TRUST                     MEMORANDUM*
COMPANY and DOE DEFENDANTS, 1-
50,

              Defendants-Appellees.

                    Appeal from the United States District Court
                             for the District of Hawaii
                    Helen W. Gillmor, District Judge, Presiding

                      Argued and Submitted October 11, 2017
                                Honolulu, Hawaii

Before: SCHROEDER, D.W. NELSON, and McKEOWN, Circuit Judges.

      Karl P. Lizza, Gary L. Dean, and John J. Mauch (“Lizza Plaintiffs” or

“Appellants”) appeal the district court’s rulings dismissing with prejudice the

wrongful foreclosure claims they asserted against Deutsche Bank National Trust

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Company (“Deutsche” or “Appellee”). We have jurisdiction under 28 U.S.C. §

1291, and we AFFIRM.

      1. Appellants’ claims for wrongful foreclosure fail because as borrowers,

they were “neither . . . part[ies] to nor . . . beneficiar[ies] of the assignment[s] and

transfer[s]” at issue and therefore “lack[] standing” to bring suit on this basis.

Brodie v. Nw. Tr. Servs., Inc., 579 F. App’x 592, 593 (9th Cir. 2014). Even

assuming Appellants had standing, their claims that Deutsche used fraudulent and

deceptive assignments to foreclose on their properties are meritless. Here, the

record establishes Deutsche lawfully acquired Appellants’ loans via various trust

agreements and was therefore entitled to proceed with foreclosure. See Bank of

Am., N.A. v. Reyes-Toledo, 390 P.3d 1248, 1254 (Haw. 2017). That Deutsche

allegedly failed to record all previous assignments of Appellants’ mortgages and

that their mortgages may have been assigned when the mortgagee was in

bankruptcy proceedings do nothing here to undermine Deutsche’s right to

foreclose.

      2. As the Lizza Plaintiffs’ premise their claim for unfair or deceptive acts

and practices (“UDAP”), Haw. Rev. Stat. § 480-2, on the same allegations on

which they base their wrongful foreclosure claim, their UDAP claims also fail

under Hawaii law.

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      3. The district court correctly dismissed with prejudice the Lizza Plaintiffs’

claims for intentional interference with prospective economic advantage

(“IIPEA”). As Appellants’ conceded below, Hawaii’s two-year statute of

limitations bars Dean’s and Mauch’s IIPEA claims. See Haw. Rev. Stat. § 657-7.

As for Lizza, he has restyled his IIPEA claim for the first time on appeal as one for

“intentional harm to property interests.” The tort, however, requires the

deprivation of or injury to a “legally protected . . . interest.” Giuliani v. Chuck, 620

P.2d 733, 738 (Haw. Ct. App. 1980) (citation omitted). Here, Lizza failed to state,

as a matter of law, a claim for wrongful foreclosure, and has conceded his default

on the loan. Under these circumstances, he has failed to state a claim for

intentional harm to property interests.

      4. Appellants’ claims for “unclean hands/tortfeasor conduct against public

policy” also fail because they are not cognizable under the law.

      5. The district court did not abuse its discretion when it dismissed with

prejudice Appellants’ claims for wrongful foreclosure, IIPEA, and unclean

hands/tortfeasor conduct against public policy. Any amendment would surely have

been “futil[e]” and caused “undue delay.” Moore v. Kayport Package Exp., Inc.,

885 F.2d 531, 538 (9th Cir. 1989) (citations omitted).

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      6. The district court also did not abuse its discretion when it struck the Lizza

Plaintiffs’ Second Amended Complaint for exceeding the scope of amendment

permitted in the court’s first dismissal order. Fairly read, the district court’s order

allowed the Lizza Plaintiffs to make more specific the UDAP claims they asserted

in their First Amended Complaint in compliance with Federal Rule of Civil

Procedure 9(b), not to assert a wholly new theory of liability. Here, the Lizza

Plaintiffs violated the district court’s order dismissing the First Amended

Complaint when they asserted for the first time in their Second Amended

Complaint a UDAP claim based on Deutsche’s alleged policy of only offering

quitclaim deeds in foreclosure sales.

      This Court weighs five factors to determine whether a district court abused

its discretion in “dismiss[ing] a case for failure to comply with a court order”: “(1)

the public’s interest in expeditious resolution of litigation; (2) the court’s need to

manage its docket; (3) the risk of prejudice to the defendants; (4) the public policy

favoring disposition of cases on their merits; and (5) the availability of less drastic

alternatives.” Ferdik v. Bonzelet, 963 F.2d 1258, 1260–61 (9th Cir. 1992)

(citations and internal quotation marks omitted).

      Save for the factor favoring disposition of cases on their merits, the other

four factors weigh in favor of dismissal. As the district court found, this case had

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been pending for over a year, and Appellants had filed two previous complaints

before finally asserting their quitclaim deed theory. The record, however,

demonstrates Appellants had every opportunity to add this theory to their First

Amended Complaint, and that their counsel was aware of the theory even before

the Complaint in this case had been filed. Permitting Appellants to assert their

eleventh-hour claim here would undermine the public’s interest in expeditious

resolution of this case as well as the court’s need to manage its docket. It would

also prejudice Deutsche with the additional “costs [and] burdens of litigation,” as it

could have moved to dismiss the quitclaim theory much earlier in the case. In re

Phenylpropanolamine (PPA) Prods. Liab. Litig., 460 F.3d 1217, 1228 (9th Cir.

2006). Finally, the district court here plainly considered less drastic sanctions by

“warn[ing] the [Lizza] [P]laintiff[s] of the possibility of dismissal before actually

ordering dismissal.” See id. at 1229 (citation and internal quotation marks

omitted). Rather than following the court’s order to make their claims more

specific, the Lizza Plaintiffs opted to violate that order and assert a new theory of

liability. “[L]ate amendments to assert new theories,” however, are rejected where,

as here, “the facts and the theory have been known to the party seeking amendment

since the inception of the cause of action.” Royal Ins. Co. of Am. v. Sw. Marine,

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194 F.3d 1009, 1016–17 (9th Cir. 1999) (citation and internal quotation marks

omitted).

      Hence, the district court did not abuse its discretion in striking the Second

Amended Complaint.

      AFFIRMED.

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