United States District Court, D. Oregon, Portland Division
OPINION AND ORDER
MICHAEL W. MOSMAN CHIEF UNITED STATES DISTRICT JUDGE.
Bayview Loan Servicing LLC, LSF9 Mater Participation Trust,
Caliber Home Loans, Inc., and M&T Bank's
(collectively "Defendants") move to dismiss
Plaintiffs Tim and Deborah Shannon's (the
"Shannons") Third Amended Complaint. The Shannons
filed a Response opposing the Motion, along with a Motion for
Leave to File a Fourth Amended Complaint. I held a hearing
addressing these Motions on April 20, 2018. At the end of the
hearing, I GRANTED Defendants' Motion to Dismiss ,
DENIED the Shannons' Motion for Leave to File Fourth
Amended Complaint , and dismissed this case with
prejudice. I write to explain why I have denied the
Shannons' motion to amend their Complaint for a fourth
2013, JP Morgan Chase Bank, N.A. filed a complaint in state
court to foreclose on the deed of trust secured by the
Shannons' property in Clackamas County. About three years
later, in June 2016, the Shannons filed this lawsuit,
seeking, among other things, a declaration invalidating the
foreclosure action. This is Defendants' third motion to
dismiss. Each time, Defendants filed a motion to dismiss, the
Shannons responded by seeking leave to amend their Complaint.
(See e.g., dkt. Nos. 26, 29, 31, 36, and 45). I
granted the Shannons' previous requests to amend their
pleadings, and denied Defendants' Motions to Dismiss as
moot. (See e.g., dkt. nos. 34, 43, and 57).
March 2017, the Shannons filed their Third Amended Complaint.
Like their prior complaints, the gravamen of the
Shannons' Third Amended Complaint is that the assignment
of the trust deed securing their loan for their property is
void; therefore, Defendants efforts to foreclose, including
the state-court foreclosure action, are void and illegal.
(Third Amended Complaint, dkt. no. 58). Shortly after the
Shannons filed their Third Amended Compliant, the parties
asked to stay this litigation while they attempted to settle
this matter through a loan modification. After settlement
efforts failed, in January 2018, Defendants filed their third
Motion to Dismiss. The Shannons filed a Response along with a
motion seeking leave to amend their Complaint for a fourth
time. (Resp. in Opp'n. to Mot. to Dismiss, dkt. no. 84
and Mot. for Leave to File Fourth Am. Compl., dkt. no. 83).
Shannons' proposed Fourth Amended Complaint removes
defendants Bayview and M&T Bank, leaving only LSF9 Master
Participation Trust ("LSF9") and Caliber as
defendants. (Proposed Fourth Am. Compl., dkt. no. 83-1). It
seeks relief based on three claims instead of the eight
claims in the Third Amended Complaint: (1) Declaratory
Judgment - Lack of Ownership Improper Chain of Title; (2)
Declaratory Judgment - Standing Improper Beneficiary; and (3)
Violation of the FDCPA. Otherwise, the factual allegations
are almost identical to those in the Third Amended Complaint.
Rule 15(a), a judge should give leave to amend when justice
so requires. In deciding a motion for leave to amend, a judge
may consider factors including bad faith or dilatory motive
on the part of the movant, repeated failure to cure
deficiencies by amendments previously allowed, and undue
prejudice to the opposing party caused by allowing amendment,
and futility of amendment and deny leave to amend on those or
similar grounds. Eminence Capital, LLC v. Aspeon,
Inc., 316 F.3d 1048, 1051 (9th Cir. 2003) (listing the
factors set offered by the Supreme Court in Foman v.
Davis, 371 U.S. 178 (1962)). "Not all of the
factors merit equal weight. As [the Ninth] circuit and others
have held, it is the consideration of prejudice to the
opposing party that carries the greatest weight."
Id. Without prejudice, or "a strong
showing" of the other Foman factors, there is a
presumption under Rule 15 in favor of granting leave to
amend. Id. Futility, however, may support a denial
of a motion to amend if it is clear that the pleading, as
amended, is subject to dismissal and cannot be cured by
amendment. United States v. Corinthian Colleges, 655
F.3d 984, 995 (9th Cir. 2011) (citations omitted).
the Shannons' motion leave to amend their pleadings
because amendment would be futile. As explained below, the
claims for relief in the proposed amended compliant are
subject to dismissal and cannot be cured by amendment.
Corinthian, 655 F.3d at 995.
their First and Second Claims for Relief in their proposed
Fourth Amended Complaint, the Shannons seek a declaration
that Defendants lack standing to bring a foreclosure action
on their property and "the foreclosure action that
[Defendants] have initiated must be considered void, enjoined
by the Court and set aside immediately" because of an
improper chain of title in the assignments of the note and
deed of trust securing the Shannons' property. (Proposed
Fourth Am. Compl. at ¶¶ 23, 26-30, dkt. no. 83-1).
These amended claims for relief are subject to dismissal
under the first-to-file rule, and the deficiencies cannot be
cured by further amendment.
first-to-file rule applies to substantially similar cases
filed in courts of concurrent jurisdiction. Ceders-Sinai
Med Ctr. v. Shalala, 125 F.3d 765, 769 (9th Cir. 1997)
(stating that when two actions involving the same parties and
issues are filed in federal courts of concurrent
jurisdiction, the first-to-file rule applies, giving the
second court discretion to transfer, stay or, dismiss the
second case); Riggs v. Johnson Cty, 73 U.S. 166, 196
(1867) (recognizing that in certain controversies, federal
and state courts are courts of concurrent jurisdiction). In
foreclosure cases, this Court and Oregon state courts are
courts of concurrent jurisdiction. Travelers Ins. Co. v.
Lawrence, 503 F.2d 83, 84-85 (9th Cir. 1974) (Travelers
"brought this suit in federal court, on the basis of
diversity jurisdiction, to foreclose its mortgage on the M.C.
Ranch located in Lake and Harney Counties, Oregon.").
The first-to-file rule serves to alleviate the burden placed
on federal courts by duplicative litigation and to prevent
the embarrassment of conflicting judgments. Church of
Scientology of Cal. v. U.S. Dep't of Army, 611 F.2d
738, 750 (9th Cir. 1979) (citations omitted) (overruled on
other grounds by Animal Legal Defense Fund v. U.S. Food
& Drug Admin., 836 F.3d 987 (9th Cir. 2016)). Judges
apply three factors when determining whether to apply the
first-to-file rule: (1) chronology of the actions; (2)
similarity of the parties; and (3) similarity of the issues.
Alltrade, Inc. v. Uniweld Prods. Inc., 946 F.2d 625,
628 (9th Cir. 1991).
the chronology factor weighs in favor of applying the rule:
JPMorgan Chase Bank filed the Clackamas County action in May
2013, three years before the Shannons filed this action in
June 2016. The second factor-similarity of the parties-also
weighs in favor of applying the rule. The fact that the
plaintiffs in the state law claim and the defendants in this
case are not mirror images of each other is not an issue;
courts have generally held that the rule does not require the
parties to be exactly identical. Kohn Law Group, Inc. v.
Auto Parts Mfg. Miss., Inc., 787 F.3d 1237, 1240 (9th
Cir. 2015). "Rather, the first-to-file rule requires
only substantial similarity of the parties."
Id. While not identical, the parties here are
substantially similar. The Shannons are the same and at least
one of the defendantsin this case and the plaintiff in the state
law case are always the assignee of the Shannon's loan,
i.e. the entity which is currently the beneficiary of the
deed of trust securing the loan. Thus, even though the name
of the party foreclosing might be changing, its ultimate
underlying identity is not. See generally, Pacesetter
Systems, Inc. v. Medtronic, Inc., 678 F.2d 93, 95 (9th
Cir. 1982) (stating the "'first-to-file' rule is
not a rigid or inflexible rule to be mechanically applied,
but rather is to be applied with a view to the dictates of
sound judicial administration.").
the third prong-similarity of the issues-also supports
applying the first-to-file rule. "The issues in both
cases also need not be identical, only substantially
similar." Kohn Law Group, 787 F.3d at 1241. Two
lawsuits involve substantially similar issues if there is
"substantial overlap" between the two suits.
Id. Both lawsuits involve foreclosure on the
Shannons' property. In essence, the first and second
claims in the Shannons' federal lawsuit are defenses to
the state-court foreclosure action; the central issue in the