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Davis v. Recontrust Co.

United States District Court, D. Nevada

July 16, 2014

CHERYL DAVIS, Plaintiff,
v.
RECONTRUST COMPANY, N.A., et al., Defendants.

ORDER

KENT J. DAWSON, District Judge.

Before the Court are Defendants' Motion to Dismiss and Motion for Sanctions (#57/#58). Plaintiff filed a response in opposition (#70) to which Defendants replied (#74).

I. Background

Plaintiff executed a promissory note for $1, 680, 000 for the purchase of the subject property located at 800 Majestic Ridge Court, Henderson, Nevada, 89052 on November 19, 2004. The note was secured by a first deed of trust for the benefit of Barrington Capital Corporation. Defendant Bank of America ("BOA") later acquired Plaintiff's loan. (#15 at 4; ¶ 11). After defaulting on her mortgage, Plaintiff sought short sale approval from BOA. (#15 at 5; ¶ 15). Unsuccessful in obtaining short sale approval, Plaintiff filed the present action against Defendants seeking damages in January 2012 alleging that Defendants improperly acted in declining her short sale request. (#1 at Ex. A).

In December of 2012, Plaintiff filed a voluntary Chapter 7 bankruptcy petition. (#70 at 3; 11). In Schedule D of Plaintiff's bankruptcy petition, BOA was listed as a creditor and the claim was marked as DISPUTED. (#70 at 3; 24-25). In the bankruptcy schedules, Plaintiff did not disclose her January 2012 lawsuit claims as assets. (#57 at Ex. A). In the bankruptcy Statement of Financial Affairs, Plaintiff did not list the January 2012 lawsuit. (#57 at Ex. B).

During the 341a Meeting of Creditors, the bankruptcy Trustee ("Trustee") asked Plaintiff whether she had the right to sue anybody for any reason. (#70 at Ex. 4). Plaintiff responded that she was suing Defendants on the grounds that Defendants did not have a clear chain of title and that Defendants would not help Plaintiff with her house. (#70 at Ex. 4). Also during the 341a Meeting of Creditors, Trustee was informed that Plaintiff's real property was underwater and thus had no value to the bankruptcy estate. (#70 at Ex. 5; ¶ 5). Further, no mention of Plaintiff's attempt to obtain monetary damages in the January 2012 lawsuit was made to Trustee during the 341a Meeting of Creditors. (#70 at Ex. 4).

Plaintiff received a discharge of her bankruptcy case in March of 2013. (#57 at Ex. C). Thereafter, Plaintiff's counsel contacted Trustee's office seeking a letter from Trustee granting Plaintiff permission to proceed with the January 2012 litigation. (#70 at Ex. 2). However, Plaintiff provided no letter or response from Trustee granting Plaintiff permission to proceed with the January 2012 litigation. In February 2014, Defendants filed the present motion to dismiss and for sanctions.

II. Discussion

A. Legal Standard for Motion to Dismiss

Pursuant to Federal Rule of Civil Procedure Rule 12(b)(6), a complaint is subject to dismissal when the plaintiff's allegations fail to state a claim upon which relief can be granted. In considering a motion to dismiss, "all well-pleaded allegations of material fact are taken as true and construed in a light most favorable to the non-moving party." Wyler Summit P'ship v. Turner Broad. Sys., Inc. , 135 F.3d 658, 661 (9th Cir. 1998) (citation omitted). Consequently, there is a strong presumption against dismissing an action for failure to state a claim. Gilligan v. Jamco Dev. Corp. , 108 F.3d 246, 249 (9th Cir. 1997) (citation omitted). "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.'" Ashcroft v. Iqbal , 556 U.S. 662, 678 (2009) (citing Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570 (2007)).

Plausibility, in the context of a motion to dismiss, means that the plaintiff has pleaded facts which allow "the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id . The plausibility standard is "more than a sheer possibility that a defendant has acted unlawfully[, ]" yet less than a "probability requirement[.]" Id . The Iqbal evaluation illustrates a two-prong analysis. First, the Court identifies "the allegations in the complaint that are not entitled to the assumption of truth, " that is, those allegations which are legal conclusions, bare assertions, or merely conclusory. Id. at 1949-51. Second, the Court considers the factual allegations "to determine if they plausibly suggest an entitlement to relief." Id. at 1951. If the allegations state plausible claims for relief, such claims survive the motion to dismiss. Id. at 1950.

B. Judicial Estoppel

In federal court, application of judicial estoppel is governed by federal law. Milton H. Greene Archives, Inc. v. Marilyn Monroe LLC , 692 F.3d 983, 992 (9th Cir. 2012). The United States Supreme Court has identified three factors courts should consider in determining whether to apply judicial estoppel:

First, a party's later position must be clearly inconsistent with its earlier position. Second, courts regularly inquire whether the party has succeeded in persuading a court to accept that party's earlier position, so that judicial acceptance of an inconsistent position in a later proceeding would create the perception that either the first or the second court was misled. Third, courts ask whether the party seeking to assert an ...

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