Lizza v. Deutsche Bank National Trust Co. ( 2017 )

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NOT FOR PUBLICATION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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