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Tadros v. Wilmington Trust

United States District Court, D. Oregon, Portland Division

October 25, 2018

ASHRAF N. TADROS and SHAUN M. TADROS, Plaintiffs,
v.
WILMINGTON TRUST, NATIONAL ASSOCIATION AS SUCCESSOR TRUSTEE TO CITIBANK, N.A.; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC.; BANK OF AMERICA NA; SPECIALIZED LOAN SERVICING, LLC; QUALITY LOAN SERVICING CORPORATION OF WASHINGTON; ROSE CITY VENTURES, INC.; and RAIN CITY CAPITAL OF OREGON, LLC, Defendants.

          OPINION AND ORDER

          ANN AIKEN, UNITED STATES DISTRICT JUDGE.

         This matter comes before the Court on: (1) plaintiffs' Motion for Leave to Amend (doc, 52); (2) plaintiffs' Motion for Reconsideration (doc. 59); and (3) defendant Rose City Ventures, Inc.'s ("Rose City") Motion to Enter Judgment on Plaintiffs' Claim to Quiet Title and Violation of Oregon TDA (doc. 54). For the reasons stated below, the motions are DENIED.

         BACKGROUND

         The parties are familiar with the background facts of this case, which are discussed at length in the Court's May 15, 2018 Opinion and Order granting defendant Wilmington Trust, National Association as Successor Trustee to Citybank, N.A. as Trustee of Structured Asset Mortgage Investments II Inc., Bear Stearns ARM Trust, Mortgage Pass-Through Certificates, Series 2006-4's ("Wilmington's") motion to dismiss. Tadros v. Wilmington Trust, Natl Assn., No. 3:17-cv-01623-AA, 2018 WL 2248453 (D. Or. May 15, 2018). The Court will not retread them here.

         In that order, the Court concluded that the res judicata effect of two bankruptcy court orders barred plaintiffs from making any claim that depends on Wilmington's lack of beneficial interest in the promissory note and deed of trust. Because that contention was essential to plaintiffs' claims for a declaratory judgment, violation of the Fair Debt Collection Practices Act ("FDCPA"), violation of Oregon's Unfair Trade Practices Act, quite title, and unjust enrichment, the Court dismissed those claims with prejudice. Without the allegation that Wilmington lacked a beneficial interest in the promissory note on the date of the foreclosure sale, the allegations supporting plaintiffs' remaining claims were insufficient to state a claim for relief. Accordingly, the Court also dismissed those claims but did so without prejudice and ordered that plaintiffs may file a motion for leave to file an amended complaint or timely seek an extension of time to file such a motion within thirty days.

         DISCUSSION

         After timely seeking an extension of time, plaintiffs filed a motion for leave to file an amended complaint on June 26, 2018. On July 5, 2018, Rose City filed a motion for entry of judgment dismissing plaintiffs' claims for quiet title and violation of the Oregon Trust Deed Act. In response on July 20, 2018, plaintiffs filed a motion to reconsider my opinion and order granting the motion to dismiss.

         I. Plaintiffs' Motion for Reconsideration

         Plaintiffs seek reconsideration of the Court's May 15, 2018 Order and Opinion dismissing their claims. [1] A court should reconsider its earlier decision if it "(1) is presented with newly discovered evidence, (2) committed clear error or the initial decision was manifestly unjust, or (3) if there is an intervening change in controlling law." Sch. Dist. No. IJ v. ACandS, Inc., 5 F.3d 1255, 1263 (9th Cir. 1993); Pyramid Lake Paiute Tribe of Indians v. Model, 882 F.2d 364, 369 n, 5 (9th Cir. 1989). Reconsideration is an "extraordinary remedy, to be used sparingly in the interests of finality and conservation of judicial resources." Kona Enters., Inc. v. Estate of Bishop, 229 F.3d 877, 890 (9th Cir. 2000) (internal quotation marks and citation omitted).

         Plaintiffs argue that the Court clearly erred when it concluded that, under the doctrine of res judicata, two bankruptcy court orders barred plaintiffs from making any claim that depends on Wilmington's lack of beneficial interest in the promissory note and deed of trust. Originally, plaintiffs responded to Wilmington's res judicata argument by (1) asserting that the order granting relief from stay had been obtained by fraud; (2) arguing that it was "debatable" that plaintiffs actually received notice of the transfer of claim and that they did not have a meaningful opportunity to challenge the transfer given how late it was in the bankruptcy proceedings; and (3) arguing that res judicata should not apply because plaintiffs wanted to challenge Wilmington's interest during the 2013 bankruptcy proceedings but were unable to.

         Now plaintiffs argue that (1) the order granting relief from stay does not preclude plaintiffs from challenging Wilmington's interest because the validity of Wilmington's claim was not litigated in the stay proceedings and (2) the order granting the transfer of claim does not have preclusive effect because plaintiffs did not have standing to object to the transfer.

         Plaintiffs' arguments do not rely on newly discovered evidence or an intervening change in controlling law. Furthermore, plaintiffs could have raised these issues before and they are therefore waived. Motions for reconsideration "may not be used to raise arguments or present evidence for the first time when they could reasonably have been raised earlier in the litigation." Kona Enters., Inc., 229 F, 3d at 890 (emphasis in original). Accordingly, plaintiffs' motion for reconsideration is denied.

         II. Plaintiffs' Motion for Leave to Amend

         Plaintiffs' Proposed Second Amended Complaint realleges plaintiffs' breach of the covenant of good faith and fair dealing and improper accounting/FDCPA claims. The proposed complaint also adds new claims for ...


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